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 Economics and Public Policy Department
March 4, 2009
Tax Law Review, Vol. 63, p. 867, 2010
U of Penn, Inst for Law & Econ Research Paper No. 09-08
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.
Number of Pages in PDF File: 91
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
Date posted: March 4, 2009 ; Last revised: February 12, 2012