Tuesday, May 08, 2012

Excellent new book on progressive consumption taxation

I've long been partial to the David Bradford X-tax, a progressive consumption tax model that basically takes the flat tax (itself not actually flat, given the zero bracket alongside a positive one), and makes it more progressive by adding higher and more graduated rates. Bradford and his successors have also done a great deal of work in figuring out how this system, or an alternative progressive consumption tax design, could best be operationalized.

Early next month, but already available order for pre-order here, AEI scholar Alan Viard and Tax Foundation scholar Robert Carroll are publishing a book on the subject, entitled "Progressive Consumption Taxation: The X-Tax Revisited." This book does a great job of explaining both the rationale for enacting an X-tax, and how it might actually work.

In some other universe, or perhaps some other part of our universe, perhaps in the far end of the Gamma Quadrant, I would like to think that there is a world much like our own, except that enacting a progressive consumption tax is actually a feasible left-right compromise that one could imagine really happening. It truly has potential Clintonian Third Way merits, although it has never gotten very far politically. The left gets progressivity comparable to that under present law, but much more transparently and at a far lower efficiency cost. The right gets exemption for the part of capital income that it may be sensible to want to exempt that is, for the "normal" return to waiting. Everyone ought to be happy.

But here on planet Earth things took a very different turn, perhaps starting in the early 1990s. Plus, despite its considerable policy merits, the X-tax may somehow fail to be sufficiently salient and reasonable-looking to an ill-informed public. So I personally believe that it is not going anywhere, and I have not for several years devoted significant intellectual effort to examining or emphasizing it.

Still, this is an excellent book that deserves a wide readership. Special comment to readers on the left: however suspicious you might be of other publications emanating from AEI and/or the Tax Foundation, this is one that you should classify as straight-shooting and worthy of your time.


Calvin Brock said...
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