Comment: The Engler-Knoll Consumption Tax Proposal: What Transition Rule Does Fairness (or Politics) Require?

Abstract:     
This commentary on the Engler-Knoll proposal on transitioning from an income tax system to a consumption tax system argues that full transition relief is unfair because it "overcompensates holders of capital, exacerbates unequal distribution of wealth, and reduces welfare." While acknowledging that the Engler-Knoll proposal is ingenious, the commentary argues that a cash flow tax with limited transition relief and lower rates is more likely to be enacted than the Engler-Knoll proposal.

Accepted Paper Series