Abstract

Using a dynamic life cycle simulation model, this study aims to find macroeconomic effects of a flat tax reform for Turkish economy. Flat tax system removes all current tax rates and taxes all sources of income at the same rate by expensing the invest- ments in the year they are made. Although this is a simple tax system, the model projects significant increase in output as well as an increase in welfare by shifting from the graduated tax system to the flat tax.

Key words: Life-cycle Simulation, Computable General-Equilibrium Simulation, Over- lapping Generations Model, Flat Tax Reform, Turkish Tax System

Article Language: EnglishTurkish