Chapter

The Case for a Spending Tax

in Fair Not Flat

Published by University of Chicago Press

Published in print April 2002 | ISBN: 9780226555607
Published online March 2013 | e-ISBN: 9780226555669 | DOI: http://dx.doi.org/10.7208/chicago/9780226555669.003.0004
The Case for a Spending Tax

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An inconsistent income tax is a horrible reality. Democrats argued with Republicans about the appropriate tax base: Democrats supporting the income tax, Republicans opposing it. Investment in a home is an important form of savings; the nontaxation of most of the appreciation in personal residences was a significant consumption tax treatment. The problem is the fundamental inconsistency in the Democratic approach to tax policy. The uneasy mixture of consumption and income tax elements has made for an inconsistent income tax riddled with loopholes. Another characteristically Republican idea is to replace the inconsistent income tax with a national retail sales tax. A national sales tax has considerable appeal. Under a sales tax, money is taxed when it is spent; there is no double tax on savings, as there is with a consistent income tax. The Fair Not Flat Tax is the logical next step. It's a consistent, progressive spending tax. It's thus the right answer to America's ailing tax system, in practice as in theory.

Keywords: flat tax; salex tax; democratic; tax policy; income tax

Chapter.  6158 words. 

Subjects: Political Economy

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