Progressive Consumption Taxation: The X-Tax Revisited

LIST OF ILLUSTRATIONS ACKNOWLEDGMENTS INTRODUCTION 1. WHY TAX CONSUMPTION? Removing the Income Tax Penalty on Saving Gains from Reform Consumption-Tax Features in the Current Income Tax System Conclusion Box: The Trade-off Fallacy 2. THE CASE FOR THE X TAX The Retail Sales Tax and the Value-Added Tax The Two-Part VAT The X Tax: A Progressive Two-Part VAT Comparing the X Tax to the Personal Expenditures Tax Conclusion Box: Optics of the X Tax and the PET 3. MAINTAINING PROGRESSIVITY Tax Rate Schedule Assessing the Distributional Effects of the X Tax Conclusion Box: Zero Revenue from Taxation of Risky Returns 4. FRINGE BENEFITS AND TRANSFER PAYMENTS Fringe Benefits Financing Social Security and Medicare Public and Private Transfer Payments Conclusion Box: Taxation of Gambling 5. BUSINESS FIRMS General Issues Distinguishing Wages from Business Cash Flow Firms with Negative Business Cash Flows Conclusion 6. FINANCIAL SERVICES Neutral Tax Treatment The Problem of Mislabeled Transactions The Search for a Solution The R+F Cash-Flow Method Accounting Methods Special Cases Conclusion 7. INTERNATIONAL TRANSACTIONS The Border Adjustment Question The Competitiveness Illusion Giving Wealth Away without Really Trying Above-Normal Returns and Transfer Pricing Other Cross-Border Issues Conclusion Box: Border Adjustment with Fixed Exchange Rates 8. THE TRANSITION Transition Burden on Existing Capital Normative Issues Outline of a Transition Policy Macroeconomic Policy during the Transition Conclusion 9. THE NONBUSINESS SECTOR Owner-Occupied Housing and Consumer Durables Production by Governments, Nonprofits, and Households Patrolling the Boundaries of the Business Cash-Flow Tax Fiscal Federalism under the X Tax Conclusion Box: Taxation of Home Resales 10. THE VAT ALTERNATIVE Subtraction and Credit-Invoice VATs The Superiority of the VAT to the Retail Sales Tax Recent Discussion of VAT Using the VAT to Replace Other Taxes The Easy Stuff Monetary Policy and Other Transition Issues Governments and Nonprofits Implications for Social Security Combating the Money Machine Conclusion CONCLUSION NOTES REFERENCES INDEX ABOUT THE AUTHORS