Gideon's Blog |
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Monday, April 08, 2002
And on a totally different topic: I've been arguing for the kind of tax reform Edward McCaffrey advocates for years. Not mentioned in the article (because it's NRO) is that a consumed income tax could be progressive. The main problem with a progressive tax code is that it discourages earning and therefore reduces productivity - high marginal tax rates; the whole supply-side shebang. The main argument for progressive taxation is that it is fairer than a flat tax; the rich can afford to bear a greater than proportionate share of the cost of supporting the state (and perhaps they even should bear such because they derive disproportionate benefits therefrom; I'm open to argument). With a consumed-income tax, you get the benefit without the cost. You could have a steeply progressive tax rate structure and all you'd need to do to give yourself a tax cut is save more and spend less. This also solves the major argument against consumption taxes: they are regressive, because poor people spend a greater percentage of their income. I could go on and on about why this is a very good tax reform. But I won't. |