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The U.S. Consumption Tax: Evolution, Not Revolution, Daniel Goldberg
The U.S. Consumption Tax: Evolution, Not Revolution, Daniel Goldberg
Daniel S. Goldberg
The article expresses the view that the current Internal Revenue Code has evolved into a hybrid income tax and consumption tax. It begins by explaining the difference between an income tax and a consumption tax and provides the backgrounds of the alternative forms of consumption tax: (1) consumed income, (2) yield exemption, and (3) point-of-sale taxation. Under the consumed income tax model of consumption tax, the individual taxpayer includes all items of income, both from labor and from capital, in its tax base, and then subtracts or deducts the portion of that income that he saves or invests. The resulting …
E Tax: The Flat Tax As An Electronic Credit Vat, Daniel S. Goldberg
E Tax: The Flat Tax As An Electronic Credit Vat, Daniel S. Goldberg
Daniel S. Goldberg
The article builds on the Hall-Rabushka Flat Tax and proposes a consumption tax called the “E Tax,” which is an electronically collected credit invoice VAT. The Hall-Rabushka Flat Tax is a two-tier consumption tax that is based on a subtraction method VAT. The Hall-Rabushka nuance, however, allows a deduction for wages as if they were purchases of materials by the employer. Wage earners would be taxed on those wages at rates that could be set as graduated or flat, with or without a zero rate or bracket amount and with or without personal exemptions and deductions. Hall and Rabushka proposed …
E-Vat: An Electronically Collected Progressive Consumption Tax, Daniel S. Goldberg
E-Vat: An Electronically Collected Progressive Consumption Tax, Daniel S. Goldberg
Daniel S. Goldberg
This report proposes replacing the income tax with an electronic, progressive consumption tax that couples a credit-method VAT (modified for wages) with a progressive wage tax. I have called this proposal e-VAT (a convenient contraction for an electronic value added tax), because it is based on a business-level-credit VAT and can be collected automatically and electronically at the point of sale. The essential advantage of e-VAT over the Hall-Rabushka flat tax is that e-VAT’s use of a credit VAT as its foundation facilitates automatic and electronic collection of the tax. A credit VAT lends itself to electronic monitoring and auditing …
The Aches And Pains Of Transition To A Consumption Tax: Can We Get There From Here?, Daniel S. Goldberg
The Aches And Pains Of Transition To A Consumption Tax: Can We Get There From Here?, Daniel S. Goldberg
Daniel S. Goldberg
This article discusses probably the most significant obstacle to the adoption of a consumption tax: the negative effects on existing wealth that the transition from the income tax to most forms of a consumption tax would have. The Congressional Budget Office in its 1997 study posed the question, “How to Get There from Here.” The difficulty with transition and the changes in the tax law since the CBO study, however, prompt the more basic question: “Can we get there from here?” This article deals with this question by examining the effects of transition on existing wealth under a variety of …