Consumption Propensity as a Factor for Tax Equity of VAT

We evaluate a simulated VAT system with proportionally increased VAT rates regarding horizontal and vertical tax equity for Switzerland. By decomposing the overall redistributive VAT effect on income distribution into a vertical, horizontal and reranking component, we find that `unequal treatment of equals' and `reranking of unequals' do not seem to be major issues. Hence, the concept of horizontal equity is not seriously infringed. We find a reason for this: the consumption propensity mainly differs between, but not within income groups.+ ID der Publikation: unilu_34838 + Sprache: Englisch + Letzte Aktualisierung: 2018-09-20 18:01:0