Taxing Ourselves

by Slemrod, Joel

• ISBN13: 9780262693639
• ISBN10: 0262693631
• Edition: 4th
• Format: Paperback
• Copyright: 2008-04-30
• Publisher: Mit Pr

Summary

As Albert Einstein may or may not have said, "The hardest thing in the world to understand is the income tax." Indeed, to follow the debate over tax reform, the interested citizen is forced to choose between misleading sound bites and academic treatises. Taxing Ourselvesbridges the gap between the two by discussing the key issues clearly and without a political agenda: Should the federal income tax be replaced with a flat tax or sales tax? Should it be left in place and reformed? Can tax cuts stimulate the economy, or will higher deficits undermine any economic benefit? Tax policy experts Joel Slemrod and Jon Bakija lay out in accessible language what is known and not known about how taxes affect the economy, offer guidelines for evaluating tax systems, and provide enough information to assess both the current income tax system and the leading proposals to reform or replace it (including the flat tax and the consumption tax). The fourth edition of this popular guide has been extensively revised to incorporate the latest information, covering such recent developments as the Bush administration's tax cuts (which expire in 2011) and the alternatives proposed by the President's Advisory Panel on Federal Tax Reform. Slemrod and Bakija provide us with the knowledge and the tools-including an invaluable voter's guide to the tax policy debate-to make our own informed choices about how we should tax ourselves.

Table of Contents

Preface	p. xi
Introduction	p. 1
Complaints about the Current Tax System	p. 3
A Different Way to Tax	p. 7
Objections to Radical Reform	p. 9
Changes in the Context of the Current System	p. 10
The Need for Objective Analysis	p. 11
What's in This Citizen's Guide	p. 11
An Overview of the U.S. Tax System	p. 13
How Governments in the United States Get Their Money	p. 13
International Comparisons	p. 15
Historical Perspectives on the U.S. Tax System	p. 16
Personal Income Taxation	p. 28
Basic Features of the U.S. Corporate Income Tax	p. 47
The Social Security Payroll Tax	p. 52
Estate and Gift Taxes	p. 53
Conclusion	p. 55
Fairness	p. 57
Vertical Equity and Tax Progressivity	p. 59
Horizontal Equity: Equal Treatment of Equals	p. 87
Transitional Equity	p. 96
Conclusion	p. 98
Taxes and Economic Prosperity	p. 99
Taxes and the Business Cycle	p. 100
Budget Deficits and Surpluses	p. 103
How Much Should Government Do?	p. 106
Tax Cuts to Force Spending Cuts versus Surpluses to Prepare for an Aging Population	p. 108
How Taxes Affect Long-Run Economic Prosperity	p. 112
A First Cut at the Evidence
How Taxes Affect Economic Prosperity	p. 119
The Specifics
Conclusion	p. 157
Simplicity and Enforceability	p. 159
How Complicated Is Our Tax System?	p. 159
What Makes a Tax System Complicated?	p. 165
What Facilitates Enforcement?	p. 185
Conclusion	p. 188
Elements of Fundamental Reform	p. 189
A Single Rate	p. 189
A Consumption Base	p. 194
A Clean Tax Base	p. 216
Conclusion	p. 230
What Are the Alternatives?	p. 231
How the Consumption Tax Plans Work	p. 232
At What Rate?	p. 239
Simplicity and Enforceability of the Consumption Tax Plans	p. 244
Distributional Effects of the Consumption Tax Alternatives	p. 253
Economic Effects of Consumption Tax Plans	p. 262
Conclusion	p. 268
Starting from Here	p. 269
Integration: Eliminating the Double Taxation of Corporate Income	p. 270
Corporate Welfare and Corporate Tax Shelters	p. 273
Inflation Indexing	p. 277
Capital Gains	p. 279
Savings Incentives in the Income Tax	p. 283
The Estate Tax	p. 288
Simplifying the Income Tax	p. 292
Technological Improvements and the Promise of a Return-Free System	p. 294
The President's Advisory Panel on Federal Tax Reform	p. 295
A Hybrid Approach: Combining a VAT with Income Taxation	p. 299
Conclusion	p. 303
A Voter's Guide to the Tax Policy Debate	p. 305
Tax Cuts versus Tax Reform	p. 305
Tax Cuts as a Trojan Horse	p. 306
The Devil Is in the Details	p. 306
The Tax System Can't Encourage Everything	p. 307
Fairness Is a Slippery Concept but an Important One	p. 307
Be Skeptical of Claims of Economic Nirvana	p. 307
The Tax System Can Be Improved	p. 308
A Double Witching Hour	p. 309
Notes	p. 311
References	p. 343
Index	p. 365
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