ABSTRACT
This chapter discusses the quantitative dimensions of tax reform by reviewing the evidence contained in the most recent studies on the efficiency and distributional effects of various flat tax proposals. The implications of the separate or joint evaluation of efficiency and distributional effects are discussed. The chapter reviews the empirical evidence on the values of key parameters. The various approaches to the measurement of the efficiency and distributional effects of tax reform proposals are represented in the studies reviewed here. A brief summary of the estimated value of the two elasticities found in the literature is presented. Efficiency effects arise from changes in the supply and allocation of factors of production. When redistribution is measured independently of efficiency, the estimated redistributional effect of tax reform is confined to the changes in the distribution of the tax burden for a given degree of inequality in the distribution of pre-tax income.
