2015 · 21 citations · 0 references
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Public AffairsEconomicsTax LawTax PolicyTaxationValue-added TaxBehavioral Responses To TaxationConsumption TaxesIncome TaxationTax ReformTaxation LawWealth TaxationCapital TaxEconomic Incidence Of TaxationLabor Supply Responses To Progressive TaxationLegal ScholarshipTax Base Calculation
Debates in tax scholarship center on whether the U.S. should adopt a value‑added consumption tax and whether to tax capital income and wealth, with prior theory focusing on labor supply and savings but empirical evidence suggesting these are not primary concerns. This article analyzes how taxpayers respond to taxation in various idiosyncratic and context‑dependent ways.
Perhaps the most fundamental questions in tax legal scholarship concern debates about what should be the ideal tax base or tax bases. In particular, scholars have vigorously disagreed about (1) whether the United States should follow other developed countries in supplementing its income tax with a value-added consumption tax, and (2) whether governments should seek to tax capital income and wealth or should instead seek to redesign or replace income taxes with progressive consumption taxes. The prior economics-oriented theoretical literature on these questions has largely focused on analyzing labor supply and savings behaviors. Yet the existing empirical literature does not support the inference that either labor supply or savings behaviors are likely to be of primary importance. This Article thus focuses instead on analyzing a variety of more idiosyncratic and context-dependent ways in which taxpayers respond to taxation. This analysis demonstrates a relatively strong case for taxing (all of) labor income, consumption, capital income, and wealth.