Am trying to build on a concept of computable general equilibrium with regard to assessing the impact of a newly proposed excise tax on wealth distribution.
However, being a new study area for me I do seek guidance and views to build up the concept.
Does anyone have an idea on how to go about measuring or evaluating the impact of a newly proposed excise tax on income inequality?
You may want to have a look at the following paper. I think it would be helpful.
Excise taxes
JR Hines - The New Palgrave Dictionary of Economics: Volume 1 …, 2008 - Springer
I am not updated anymore in this literature, but I assume that you can take one of the two following paths:
(1) A micro-simulation model with not so sophisticated behavioral reponses but quite much heterogeneity. Basically, this approach can allow you to go deep into the type of goods taxed and the different consumption patterns and so on.
(2) A general equilibrium model with heterogeneous agents. They have been much progress in this area. This allows you to model the impact on the stock of capital, etc.
Overall, I think there is a trade-off between both approaches. Furthermore, there is a new generation of micro-simulation models integrating both approaches (at least, partially)...
Are you considering a tax on income or a tax on assets or something else?
Christopher C Kelly
It's an excise duty tax proposed on bank transfers exceeding a certain amount.
Am interested in analysing its wealth/ income distributive effects
Does that assume a tax on wealth distribution is best effected through the banking system? If so, I would expect the wealthy to use alternative means of transacting such as in specie, cryptocurrency or cash so as to avoid the tax on bank transfers. Another way around it would be to keep bank transfers below your threshold amount by splitting them between multiple bank accounts or staging them over time.
Christopher C Kelly
To be precise , this was a proposed tax by the Kenyan government on the grounds of the immense growth of the Kenyan financial sector : as such the government in attempt to harness some of the gains from the sector led to the newly proposed Robinhood tax to aid in attainment of Universal Health care.
However, due to much uncertainties including lack of a clear and comprehensive definition of the tax, the tax before implementation was suspended by the Kenyan High court.This formed the basis of my interest so far.
More information on the tax can be read from
https://www.ft.com/content/c06aa88a-762d-11e8-b326-75a27d27ea5f
https://nairobinews.nation.co.ke/news/robin-hood-tax-rotich
However, thank you for your insights and I totally agree with you on the opinion that loopholes will more likely emerge to circumvent the tax.
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