ISP Working Paper Number 05-03

On Some Non-Equivalence Results of Ad Valorem Tax

Sally Wallace, Daoshu Wang, and Yongsheng Xu, September 2004

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Abstract:

This paper reviews some established non-equivalence results of an ad valorem tax, provides a general proof for those results, and presents some evidence illustrating that policy makers may be neglecting the subtlety of non-equivalence in establishing policies such as revenue maximizing tax rates.