Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94246
Authors: 
Gang, Ira N.
Das-Gupta, Arindam
Year of Publication: 
1997
Series/Report no.: 
Working Papers, Department of Economics, Rutgers, The State University of New Jersey 1995-19
Abstract: 
We describe the simple analytics of the four main types of sales taxes under revenue neutrality: the retail sales tax, the value added tax, a cascading sales tax and a manufacturers' sales tax. The retail sales tax is shown to be equivalent to a value added tax. In order to produce equal revenues these two taxes must be at a higher rate than a cascading tax. However, output under a retail sales tax exceeds that under a cascading sales tax and deadweight losses are lower. The manufacturers' sales tax offers the worst of all worlds: with revenue neutrality the manufacturers' sales tax has a higher tax rate, lower output and greater deadweight loss than all the other taxes.
Subjects: 
deadweight loss
efficiency
retail
sales tax
VAT
JEL: 
H2
H21
H25
Document Type: 
Working Paper

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