Experimental Evidence of Market Reactions to New Consumption Taxes

. Consumption taxes of various forms are of increasing importance worldwide. This study employs a laboratory market design to investigate differential market reactions to three consumption tax forms while holding all other factors constant. Ten laboratory markets were conducted, each involving nine volunteer participants. Market participants were randomly assigned to roles analogous to wholesalers, retailers, or consumers of a market good. The three tax forms were (1) a sales tax imposed on retail consumers of a commodity, (2) a gross-receipts tax imposed on retail sellers, and (3) a value-added tax imposed on sellers at two levels of production. At least three markets were conducted under each tax regime as a basis for experimental comparison. The tax rates used in each structure were chosen so that a competitive model would predict different equilibrium prices but the same tax burdens (the sum of explicit and implicit taxes) across the three tax regimes. Results generally support these predictions, with somewhat stronger support for equivalent tax revenues (explicit taxes collected) than for equivalent tax incidence (distribution of tax burdens after price adjustments). Observed tax incidence differences suggest that market agents who are called upon to explicitly pay taxes actually bear relatively lower tax burdens after implicit tax price adjustments. In general, however, price shifting is consistent with the competitive model, supporting the economic dictum that the choice among alternative designations of taxpaying agents is more a question of form than of economic substance. Resume. Les taxes a la consommation revetant diverses formes augmentent en importance a travers le monde. Les auteurs ont concu un modele de marche experimental dans le but d'etudier les differentes reactions du marche a trois formes de taxe a la consommation, tout en maintenant constants l'ensemble des autres facteurs. Dix marches experimentaux ont ete crees, chacun d'eux faisant intervenir neuf participants volontaires a qui etaient attribues aleatoirement des roles analogues a ceux de grossistes, de detaillants ou de consommateurs d'un marche de produits. Les trois formes de taxe etaient les suivantes: (1) une taxe de vente s'appliquant aux consommateurs d'un bien sur le marche de detail, (2) une taxe sur les encaissements bruts s'appliquant aux detaillants et (3) une taxe sur la valeur ajoutee s'appliquant aux vendeurs, a deux echelons de production. Au moins trois marches sous chaque regime fiscal ont servi de base de comparaison experimentale. Les taux utilises dans chaque structure ont ete choisis de telle sorte qu'un modele concurrentiel arrive a des prix d'equilibre differents mais a une fardeau fiscal identique (la somme des taxes explicites et implicites) sous les trois regimes. Dans l'ensemble, les resultats obtenus confirment ces predictions, plus encore dans le cas des recettes fiscales equivalentes. Les differentes incidences fiscales observees donnent a penser que les agents du marche de qui l'on reclame explicitement des taxes supportent, en realite, un fardeau fiscal relativement moins eleve, une fois operes les ajustements de prix relatifs aux taxes implicites. De maniere generale, cependant, les variations de prix sont conformes au modele concurrentiel, ce qui corrobore cet axiome economique selon lequel le choix des agents a qui doit etre attribue le role de contribuable est davantage une question de forme que de substance economique.