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Overcoming the Fiscal Trilemma with Two Progressive Consumption Tax Supplements

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  • Laurence Seidman

Abstract

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.

Suggested Citation

  • Laurence Seidman, 2013. "Overcoming the Fiscal Trilemma with Two Progressive Consumption Tax Supplements," Public Finance Review, , vol. 41(6), pages 824-851, November.
    • Handle: RePEc:sae:pubfin:v:41:y:2013:i:6:p:824-851
    DOI: 10.1177/1091142113499396
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    References listed on IDEAS

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    2. Seidman Laurence, 2010. "Reducing Future Deficits While Stimulating Today's Economy," The Economists' Voice, De Gruyter, vol. 7(3), pages 1-5, August.
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    19. James R. Hines Jr., 2007. "Taxing Consumption and Other Sins," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 49-68, Winter.
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    24. Laurence S. Seidman, 1997. "A Progressive Consumption Tax," Challenge, Taylor & Francis Journals, vol. 40(6), pages 63-84, November.
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    2. Udai Lal Paliwal & Nitin Kishore Saxena & Ashutosh Pandey, 2019. "Analysing the Impact of GST on Tax Revenue in India: The Tax Buoyancy Approach," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 514-523.

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    More about this item

    Keywords

    tax reform; progressive consumption tax supplements;

    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
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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