Consumption Taxation is Still Superior to Income Taxation
David A. Weisbach
University of Chicago - Law School; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)
Stanford Law School
U of Chicago Law & Economics, Olin Working Paper No. 358
Stanford Law and Economics Olin Working Paper No. 350
This essay responds to an article by Daniel Shaviro which argues in part that the failure of empirical assumptions behind the permanent income hypothesis undermines the case for preferring consumption taxation over income taxation. We consider each of Shaviro's arguments and conclude that none change the basic considerations in favor of consumption taxation in any significant way. Shaviro concludes that administrability and implementation concerns should be central to the choice of the tax base and that these concerns are likely to point to taxing consumption. We agree with this conclusion.
Number of Pages in PDF File: 20
Date posted: September 11, 2007 ; Last revised: September 29, 2009
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