91 Pages Posted: 4 Mar 2009 Last revised: 12 Feb 2012
Date Written: March 4, 2009
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.
See also, Sanchirico, Chris William, A Counter-Reply to Bankman and Weisbach (June 20, 2011). Tax Law Review, Vol. 64, No. 4, pp. 551-561, 2011; Available at SSRN: http://ssrn.com/abstract=1907330.
Keywords: Tax policy, equity and efficiency, optimal taxation, tax substitution argument, consumption tax versus income tax, Atkinson and Stiglitz, taxes versus legal rules
JEL Classification: K34, D30, D31, D60, D61, D63, H00, H20, H21, J38, K00, K10
Suggested Citation: Suggested Citation
Sanchirico, Chris William, A Critical Look at the Economic Argument for Taxing Only Labor Income (March 4, 2009). Tax Law Review, Vol. 63, p. 867, 2010; U of Penn, Inst for Law & Econ Research Paper No. 09-08. Available at SSRN: https://ssrn.com/abstract=1353322