12 Pages Posted: 9 Aug 2011 Last revised: 7 Oct 2011
Date Written: June 20, 2011
In “A Critical Look at the Economic Argument for Taxing Only Labor Income,” I challenge the tax substitution argument, which according to accepted wisdom fairly establishes that it is best to tax only labor earnings. A portion of Critical Look is directed at Professors Bankman and Weisbach’s application of tax substitution reasoning in two recent articles concerning the choice between income taxation and consumption taxation (which they equate, for purposes of their analysis, to labor-earnings-only taxation). Bankman and Weisbach have now issued a reply to Critical Look. In this counter-reply, I respond to their most important points.
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 Counter-Reply to Professors Bankman and Weisbach (June 20, 2011). Tax Law Review, Vol. 64, No. 4, pp. 551-561, 2011; U of Penn Law School, Public Law Research Paper No. 11-31; U of Penn, Inst for Law & Econ Research Paper No. 11-25. Available at SSRN: https://ssrn.com/abstract=1907330