Consumption Taxation is Still Superior to Income Taxation

20 Pages Posted: 11 Sep 2007 Last revised: 29 Sep 2009

David A. Weisbach

University of Chicago - Law School; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Joseph Bankman

Stanford Law School

Date Written: September 2007

Abstract

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.

Suggested Citation

Weisbach, David A. and Bankman, Joseph, Consumption Taxation is Still Superior to Income Taxation (September 2007). U of Chicago Law & Economics, Olin Working Paper No. 358; Stanford Law and Economics Olin Working Paper No. 350. Available at SSRN: https://ssrn.com/abstract=1012953 or http://dx.doi.org/10.2139/ssrn.1012953

David Weisbach (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-3342 (Phone)
773-702-0730 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

Joseph Bankman

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-725-3825 (Phone)
650-725-7663 (Fax)

Paper statistics

Downloads
463
Rank
47,705
Abstract Views
2,292