Consumption taxes: A view of future tax reform in America.
Document Type
Article
Publication Date
1994
Date Issued
1994-01-01
Date Available
2013-12-16
ISSN
0732-8435
Abstract
Consumption taxes are more effective than income taxes in encouraging national savings. This is because the former are levied when income is spent while the latter impose taxes on savings when earned. Critics of the consumption tax charge that it is regressive and will unfairly burden low-income Americans. Since the poor tend to spend all of their earnings, their entire income will therefore be subject to the tax. Higher income individuals, on the other hand, will only pay taxes for that portion of their income that they spend. Income that are saved or invested will not be affected. This valid argument against consumption taxes can be countered by the implementation of a progressive consumption tax approach rather than by a flat rate system. Under this approach, progressive rates will be imposed and a standard deduction may even be allowed so that tax obligations will be proportionate to the taxpayers' ability to pay.
Language
en_US
Publisher
New York State Society of Certified Public Accountants
Recommended Citation
Fellows, J. A. (1994). Consumption taxes: A view of future tax reform in America. CPA Journal, 64(4), 28-35.
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Comments
The article was the recipient of the Annual Max Block award as the outstanding article in the 1994 series of The CPA Journal. Awarded by the New York State Society of Certified Public Accountants. Abstract only. Full-text article is available through the link provided. Published in CPA Journal, 64(4), 28-35.