Tax Reform, Interest Rates and Capital Allocation

Abstract

The impacts of four major tax reform proposals on the level of interest rates and the allocation of the American capital stock are derived. The four plans are Bradley-Gephardt, Kemp-Kasten, Treasury I and Treasury II. The allocation is among seven types of nonresidential capital, rental housing, and owner occupied housing held by households in five different income classes.The inflation-neutrality of the four plans as also deduced.