Taxing Ourselves: A Citizen's Guide to the Debate Over Taxes

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MIT Press, 2004 - Business & Economics - 382 pages
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"Citizens should read Taxing Ourselves before casting their votes in local, state, and national elections. Politicians should read Taxing Ourselves before taxing us."
—Richard C. Schiming, Business Library Review


To follow the debate over tax reform, the interested citizen is forced to choose between misleading sound bites and academic treatises. Taxing Ourselves bridges the gap between the two by presenting in clear nontechnical language the key issues in tax reform: who should pay taxes, how taxes affect the economy, and whether to reform or replace the current tax system. The authors discuss various alternative proposals in detail, including the flat tax and the sales tax, but they are not advocates for any of them; instead, they provide readers with the knowledge and the tools—including an informative overview of the U.S. tax system and an invaluable voter's guide to the tax policy debate—to make their own informed choices about how we should tax ourselves.

The third edition of this popular guide has been extensively revised and updated to cover all changes in tax laws through May 2003 and to reflect the most recent research and relevant data. It also provides new or expanded treatment of issues in the current debate, including tax cuts and whether they stimulate the economy, savings incentives, double taxation of corporate income, the estate tax, corporate tax shelters, and the economic and political effects of budget deficits.
 

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Contents

Introduction
1
Complaints about the Current Tax System
2
A Different Way to Tax
7
Objections to Radical Reform
8
Changes in the Context of the Current System
10
The Need for Objective Analysis
11
An Overview of the US Tax System
13
International Comparisons
15
Elements of Fundamental Reform
189
A Single Rate
190
A Consumption Base
195
A Clean Tax Base
217
Conclusion
231
What Are the Alternatives?
233
How the Consumption Tax Plans Work
234
At What Rate?
242

Historical Perspectives on the US Tax System
17
Personal Income Taxation
28
Basic Features of the US Corporate Income Tax
46
The Social Security Payroll Tax
51
Estate and Gift Taxes
52
Conclusion
53
Fairness
55
Vertical Equity
57
Equal Treatment of Equals
85
Transitional Equity
93
Conclusion
95
Taxes and Economic Prosperity
97
Taxes and the Business Cycle
99
Budget Deficits and Surpluses
103
How Much Should Government Do?
109
Tax Cuts to Force Spending Cuts versus Surpluses to Prepare for an Aging Population
111
A First Cut at the Evidence
114
The Specifics
121
Conclusion
155
Simplicity and Enforceability
157
What Makes a Tax System Complicated?
163
Evasion and Enforcement
172
What Facilitates Enforcement?
185
Conclusion
188
Simplicity and Enforceability of the Consumption Tax Plans
246
Distributional Effects of the Consumption Tax Alternatives
256
Economic Effects of Consumption Tax Plans
264
Conclusion
271
Starting from Here
273
Eliminating the Double Taxation of Corporate Income
274
Corporate Welfare and Corporate Tax Shelters
278
Inflation Indexing
283
Capital Gains
285
Savings Incentives in the Income Tax
289
The Estate Tax
294
Simplifying the Income Tax
299
Technological Improvements and the Promise of a ReturnFree System
302
Ideas for Fundamental Income Tax Reform
303
Combining a VAT with Income Taxation
304
Conclusion
307
A Voters Guide to the Tax Policy Debate
309
Tax Cuts as a Trojan Horse
310
Fairness Is a Slippery Concept but an Important One
311
The Tax System Can Be Improved
312
Notes
313
References
347
Index
369
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