This article generalizes the traditional concept of equal yield tax alternatives to
accommodate government deficits in an intertemporalframework. This generalization is important for the analysis of actual tax reform proposals. First, the comparison of the several equal yield alternatives developed in this article provides a
measure of the marginal financial crowding-out effects of changes in government
deficits induced by tax changes. Second, it suggests that the emphasis by policymakers on revenue neutrality as a proxy for deficit neutrality is misplaced and should
be replaced by a direct emphasis on deficit neutrality. The generalized concept of
equal yield is illustrated with a dynamic general equilibrium model of the U.S.
economy and the analysis of the effects of integrating the personal and corporate
income tax systems.
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