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The Case for Taxing (All of) Labor Income, Consumption, Capital Income, and Wealth

88 Pages Posted: 14 Jul 2014 Last revised: 23 Nov 2015

David Gamage

Indiana University Maurer School of Law

Date Written: July 1, 2015

Abstract

Perhaps the most fundamental questions in tax legal scholarship concern debates about what should be the ideal tax base or tax bases. In particular, scholars have vigorously disagreed about (1) whether the United States should follow other developed countries in supplementing its income tax with a value-added consumption tax, and (2) whether governments should seek to tax capital income and wealth or should instead seek to redesign or replace income taxes with progressive consumption taxes.

The prior economics-oriented theoretical literature on these questions has largely focused on analyzing labor supply and savings behaviors. Yet the existing empirical literature does not support the inference that either labor supply or savings behaviors are likely to be of primary importance. This Article thus focuses instead on analyzing a variety of more idiosyncratic and context-dependent ways in which taxpayers respond to taxation. This analysis demonstrates a relatively strong case for taxing (all of) labor income, consumption, capital income, and wealth.

Keywords: optimal tax, tax law, income tax, value added tax, VAT, capital income tax, wealth tax, capital tax

Suggested Citation

Gamage, David, The Case for Taxing (All of) Labor Income, Consumption, Capital Income, and Wealth (July 1, 2015). 68 Tax Law Review 355 (2015); UC Berkeley Public Law Research Paper No. 2465522. Available at SSRN: https://ssrn.com/abstract=2465522

David Gamage (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

HOME PAGE: http://www.law.indiana.edu/about/people/bio.php?name=gamage-david

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