20 Pages Posted: 11 Sep 2007 Last revised: 29 Sep 2009
Date Written: September 2007
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: 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