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The structure and reform of the U.S. tax system is one of today's most hotly debated issues. This book provides a clear description of where the system stands today and how it evolved. Most importantly, it outlines the principles by which a tax system should be designed and assesses current flat-tax and consumption-based proposals for tax reform in terms of whether they measure up to these principles.An introduction and summary provide an overview of the tax system, (including sources of revenue and trends in sources) and its relative impact on various groups and industries. Chapter 2 describes the current U.S. tax structure and its incidence, and corrects a number of common misconceptions (income from capital is actually taxed less heavily than income from labor; the rich generally do not pay an appreciably higher proportion of their income in taxes than poorer groups.) Basic issues and problems in tax policy are analyzed in chapter 3, which points out that there is no strong scientific basis for believing that shifting income taxes from capital to labor or from upper to lower income groups would have a substantial long-run effect on saving or capital formation; in fact, the adverse impact on the labor supply could outweigh the beneficial effect on capital formation.The final three chapters take up the major types of taxation: personal income taxes, corporate income taxes, and consumption taxes. Attention is focused in particular on the congressional "flat tax" proposals by Bradley-Gephardt and Kemp-Kasten (the Treasury's proposal is summarized in the book's preface). A concluding chapter examines the advantages and disadvantages of two new forms of taxation-the value-added tax, which has been used extensively in Europe, and the as yet untested comprehensive cash-flow tax that has received substantial academic support in recent years. These consumption-based taxes represent a substantial departure from the present U.S. tax structure, which is based primarily upon income.All of the authors are at the University of Pennsylvania. Albert Ando is Professor of Economics. Marshall Blume is Howard Butcher Professor of Finance at the Wharton School, and Irwin Friend is Edward J. Hopkinson Professor of Finance and Economics at the Wharton School and Director of the Rodney White Center for Financial Research. ... Read more

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The main purpose of this book is to compare two polar approaches to personal income tax reform in terms of both equity and efficiency. The options compared are a consumption-base flat tax of the type proposed by Hall and Rubushka for the United States and a comprehensive income base with lower tax rates based on the principles suggested by Simons. These options are evaluated at both the theoretical and empirical level. The book debunks the widely held view that a shift to a consumption-base flat tax is superior in terms of economic efficiency to a move to a comprehensive income tax. Using Canada as an example, this study shows that, in a small open economy, a move to a personal income tax with a comprehensive base and across the board tax cuts in order to maintain revenue-neutrality will improve both equity and efficiency. Within the framework of a knowledge based economy, this option is found to be superior to a consumption-base flat tax. ... Read more

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This volume is produced from digital images created through the University of Michigan University Library's large-scale digitization efforts. The Library seeks to preserve the intellectual content of items in a manner that facilitates and promotes a variety of uses. The digital reformatting process results in an electronic version of the original text that can be both accessed online and used to create new print copies. The Library also understands and values the usefulness of print and makes reprints available to the public whenever possible. This book and hundreds of thousands of others can be found in the HathiTrust, an archive of the digitized collections of many great research libraries. For access to the University of Michigan Library's digital collections, please see http://www.lib.umich.edu and for information about the HathiTrust, please visit http://www.hathitrust.org ... Read more

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In their analysis of how a consumption tax would affect multinational investment, the authors consider capital inflows into the United States and the likely consequences of a simplification of the taxation of international transactions. ... Read more

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Responding to a deepening economic crisis, serious structural problems with the tax system, a long and deep-seated opposition to even modest tax increases, and a weak tax administration, the Guatemalan government introduced a comprehensive tax reform program in 1992. In this concise volume, experts present analysis that supported the reform program and evaluate the first round of revenue and tax-burden effects. ... Read more