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Consumption-based Direct Taxes: A Guided Tour of the Amusement Park

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Author Info
Charles E. McLure, Jr.
George R. Zodrow

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Abstract

Although consumption-based direct taxation has long been advocated in academic and policy circles, very few countries have actually implemented such taxes.This article provides an overview of alternative approaches to direct consumption taxation and examines arguments favoring consumption taxes over income taxes. It then describes and analyzes efforts at "fundamental tax reform" involving replacing an income tax with a consumption tax in the United States and in several developing countries and countries in transition from socialism in which the authors have been involved.

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Publisher Info
Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 63 (2007)
Issue (Month): 2 (June)
Pages: 285-307
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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200706)63:2_285:cdtagt_2.0.tx_2-x

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Related research
Keywords: consumption-based taxes; fundamental tax reform; tax reform in developing countries; tax reform in transition countries;

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Find related papers by JEL classification:
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. David F. Bradford, 2003. "The X Tax in the World Economy," Working Papers 109, Princeton University, Department of Economics, Center for Economic Policy Studies.. [Downloadable!]
    Other versions:
  2. George R. Zodrow, 2007. "Should Capital Income be Subject to Consumption-Based Taxation?," Working Papers 0715, Oxford University Centre for Business Taxation. [Downloadable!]
  3. Michael Devereux & Harold Freeman, 1991. "A general neutral profits tax," Fiscal Studies, Institute for Fiscal Studies, vol. 12(3), pages 1-15, August.
  4. Bruce, Donald & Holtz-Eakin, Douglas, 1999. "Fundamental Tax Reform and Residential Housing," Journal of Housing Economics, Elsevier, vol. 8(4), pages 249-271, December. [Downloadable!] (restricted)
  5. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75. [Downloadable!] (restricted)
  6. Erosa, Andres & Gervais, Martin, 2002. "Optimal Taxation in Life-Cycle Economies," Journal of Economic Theory, Elsevier, vol. 105(2), pages 338-369, August. [Downloadable!] (restricted)
    Other versions:
  7. McLure, Charles E, Jr, 1992. "A Simpler Consumption-Based Alternative to the Income Tax for Socialist Economies in Transition," World Bank Research Observer, Oxford University Press, vol. 7(2), pages 221-37, July.
  8. Summers, Lawrence H, 1981. "Capital Taxation and Accumulation in a Life Cycle Growth Model," American Economic Review, American Economic Association, vol. 71(4), pages 533-44, September. [Downloadable!] (restricted)
  9. Michael Keen & John King, 2002. "The Croatian profit tax: an ACE in practice," Fiscal Studies, Institute for Fiscal Studies, vol. 23(3), pages 401-418, September.
  10. Robin Boadway & Neil Bruce, 1982. "A General Proposition on the Design of a Neutral Business Tax," Working Papers 461, Queen's University, Department of Economics.
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  11. Michael Devereux & Harold Freeman, 1995. "The impact of tax on foreign direct investment: Empirical evidence and the implications for tax integration schemes," International Tax and Public Finance, Springer, vol. 2(1), pages 85-106, February. [Downloadable!] (restricted)
  12. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-22, May. [Downloadable!] (restricted)
  13. Hubbard, R Glenn, 1997. "How Different Are Income and Consumption Taxes?," American Economic Review, American Economic Association, vol. 87(2), pages 138-42, May. [Downloadable!] (restricted)
  14. Slemrod, Joel, 1997. "Deconstructing the Income Tax," American Economic Review, American Economic Association, vol. 87(2), pages 151-55, May. [Downloadable!] (restricted)
  15. Charles Mclure & George Zodrow, 1996. "A hybrid consumption-based direct tax proposed for Bolivia," International Tax and Public Finance, Springer, vol. 3(1), pages 97-112, January. [Downloadable!] (restricted)
  16. Feldstein, Martin S, 1978. "The Welfare Cost of Capital Income Taxation," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages S29-51, April. [Downloadable!] (restricted)
  17. George Zodrow, 2006. "Capital Mobility and Source-Based Taxation of Capital Income in Small Open Economies," International Tax and Public Finance, Springer, vol. 13(2), pages 269-294, May. [Downloadable!] (restricted)
  18. Zodrow, George R., 1995. "Taxation, uncertainty and the choice of a consumption tax base," Journal of Public Economics, Elsevier, vol. 58(2), pages 257-265, October. [Downloadable!] (restricted)
  19. David Altig et al., 2001. "Simulating Fundamental Tax Reform in the United States," American Economic Review, American Economic Association, vol. 91(3), pages 574-595, June. [Downloadable!] (restricted)
  20. Saez, Emmanuel, 2002. "The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes," Journal of Public Economics, Elsevier, vol. 83(2), pages 217-230, February. [Downloadable!] (restricted)
    Other versions:
  21. Zodrow, George R. & McLure, Charles E. Jr., 1988. "Implementing direct consumption taxes in developing countries," Policy Research Working Paper Series 131, The World Bank. [Downloadable!]
  22. Naito, Hisahiro, 1999. "Re-examination of uniform commodity taxes under a non-linear income tax system and its implication for production efficiency," Journal of Public Economics, Elsevier, vol. 71(2), pages 165-188, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Roy Bahl & Sally Wallace, 2007. "From Income Tax to Consumption Tax? The Case of Jamaica," International Studies Program Working Paper Series, at AYSPS, GSU paper0712, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
    Other versions:
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