Abstract

This paper investigates sales tax inequities from a new perspective: by house-Abstract hold heads ’ age groups and income classes. With income constant, spendingvariations exist due to family head’s age, just as variations exist due to familysize. This study examines effective rates (and composite burden indices) for three age groups over ten income classes, computed by applying food-exempt and food-taxed structures. There is evidence of vertical and horizontal in-eguities for various age groups, though such inequities are reduced when food is exempt. An important policy implication is that food exemption (or tax credit) can mitigate both types of inequities for different age groups, an argument already well established concerning family sizes. This paper investigates sales tax burden differentials forconsumers who are distinguished primarily according to age groups of the family heads and income classes. To the best of my knowledge, no other published work has appraised sales tax equity aspects from this perspective. Most studies have pertained to (1) vertical inequities, such as regressivity for consumers generally and by family size, regressivity modifications by exclud-ing or including certain components of consumer spending, or regressivity measured according to different concepts of ability to pay, and (2) horizontal inequities, such as burden differentials, at comparable income levels, among various family sizes, rural-urban consumers, and black-white families.