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A Critical Look at the Economic Argument for Taxing Only Labor Income
Chris William Sanchirico University of Pennsylvania Law School; University of Pennsylvania Wharton School - Business & Public Policy Department Tax Law Review, Forthcoming U of Penn, Inst for Law & Econ Research Paper No. 09-08 Abstract: According to accepted wisdom, "the tax substitution argument" fairly establishes that it is best to tax only labor income, and not also income from savings and investment. In this Article, I show that the tax substitution argument - which is actually a disjointed collection of arguments - is variously incomplete, incorrect, and conclusory.
Keywords: Tax policy, equity and efficiency, optimal taxation, tax substitution argument, consumption tax versus income tax, Atkinson and Stiglitz, taxes versus legal rules JEL Classifications: K34, D30, D31, D60, D61, D63, H00, H20, H21, J38, K00, K10 Accepted Paper SeriesDate posted: March 04, 2009 ; Last revised: November 17, 2009Suggested CitationContact Information
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