The Progressive Consumption Tax Revisited

31 Pages Posted: 9 Mar 2004

See all articles by Steven A. Bank

Steven A. Bank

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


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.

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

Suggested Citation

Bank, Steven A., The Progressive Consumption Tax Revisited. Available at SSRN:

Steven A. Bank (Contact Author)

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

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