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The Progressive Consumption Tax Revisited

Steven A. Bank

University of California, Los Angeles (UCLA) - School of Law

Michigan Law Review, Forthcoming

In his recent book, Professor Edward McCaffery proposes to replace the income tax with a progressive consumption tax. By exempting savings and investment from the income tax base, while subjecting spending to a progressive rate tax, McCaffery's proposal appears to be the perfect compromise. This Review examines three previous attempts to introduce a progressive consumption tax - in 1921, 1942, and 1995 - and discusses why they failed to satisfy both sales tax and progressive income tax proponents. The problem was that each previous attempt was considered an illusory compromise. Consumption tax supporters were offended by the progressive rate structure while income tax supporters did not want to adopt what they perceived to be a move from an ability to pay base to a necessity to consume base. The Review concludes by analyzing the extent to which McCaffery's proposal suffers from the same problems as its predecessors.

Number of Pages in PDF File: 31

Keywords: Book review, progressive consumption tax, sales tax, income tax base

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Date posted: March 9, 2004  

Suggested Citation

Bank, Steven A., The Progressive Consumption Tax Revisited. Michigan Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=515502

Contact Information

Steven A. Bank (Contact Author)
University of California, Los Angeles (UCLA) - School of Law ( email )
385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-794-7601 (Phone)
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