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Overcoming the Fiscal Trilemma with Two Progressive Consumption Tax Supplements

Listed author(s):
  • Laurence Seidman

    ()

    (Department of Economics, University of Delaware, Newark, DE, USA)

This article recommends a tax reform strategy that can accomplish three objectives: raise sufficient revenue to deal with long-run budget challenges, promote long-run economic growth, and provide progressivity in the face of increasing inequality. The strategy for overcoming this fiscal trilemma is to retain (with modification) the personal income tax, the corporate income tax, and the payroll tax, and add two progressive consumption tax supplements: a value-added tax (VAT) made progressive by a refundable VAT credit on the 1040 and a progressive consumption surtax on the 1040.

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File URL: http://pfr.sagepub.com/content/41/6/824.abstract
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Article provided by in its journal Public Finance Review.

Volume (Year): 41 (2013)
Issue (Month): 6 (November)
Pages: 824-851

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Handle: RePEc:sae:pubfin:v:41:y:2013:i:6:p:824-851
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  1. Seidman Laurence, 2010. "Reducing Future Deficits While Stimulating Today's Economy," The Economists' Voice, De Gruyter, vol. 7(3), pages 1-5, August.
  2. Kenneth Lewis & Laurence Seidman, 1998. "The Impact of Converting to a Consumption Tax When Saving Propensities Vary: An Empirical Analysis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(4), pages 499-503, October.
  3. Alan D. Viard & Robert Carroll, 2012. "Progressive Consumption Taxation: The X Tax Revisted," Books, American Enterprise Institute, number 10533, September.
  4. Saul D. Hoffman & Laurence S. Seidman, 2003. "Helping Working Families: The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number hwf.
  5. Charles E. McLure, Jr. & George R. Zodrow, 2007. "Consumption-based Direct Taxes: A Guided Tour of the Amusement Park," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(2), pages 285-307, June.
  6. Seidman, Laurence S. & Lewis, Kenneth A., 1999. "The Consumption Tax and the Saving Elasticity," National Tax Journal, National Tax Association, vol. 52(1), pages 67-78, March.
  7. Saul D. Hoffman & Laurence S. Seidman, 1990. "The Earned Income Tax Credit," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number eitc.
  8. James Alm & Asmaa El-Ganainy, 2013. "Value-added taxation and consumption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 105-128, February.
  9. repec:aei:rpbook:33699 is not listed on IDEAS
  10. James R. Hines Jr., 2007. "Taxing Consumption and Other Sins," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 49-68, Winter.
  11. Seidman, Laurence S. & Lewis, Kenneth A., 1999. "The Consumption Tax and the Saving Elasticity," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 67-78, March.
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