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Fundamental Tax ReformIssues, Choices, and Implications$
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John W. Diamond and George R. Zodrow

Print publication date: 2008

Print ISBN-13: 9780262042475

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262042475.001.0001

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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 07 July 2022

Tax Reform in the Twenty-first Century

Tax Reform in the Twenty-first Century

Chapter:
(p.26) (p.27) 1 Tax Reform in the Twenty-first Century
Source:
Fundamental Tax Reform
Author(s):

Alan J. Auerbach

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262042475.003.0002

This chapter examines the strengths and weaknesses of the case for taxation based on consumption rather than income. It proposes a simple macroeconomic model for analyzing a wide range of issues raised by the different tax reform proposals, including those relating to income tax and consumption tax. After discussing the choice between income and consumption taxation, the chapter looks at tax-related issues concerning capital income as well as bequests and inheritances. It then turns to distortions in the treatment of assets and liabilities, attributes of consumption taxes (government purchases, consumption base), the timing of tax payments, individual versus business taxation, and tax progressivity.

Keywords:   taxation, consumption, income, macroeconomic model, tax reform, income tax, consumption tax, capital income, assets and liabilities, tax payments

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