Options for Tax Reform
Posted: 28 Mar 2005
This study examines three important goals for tax reform: simplification, efficiency, and limited government. Based on these goals, the author examines the pros and cons of various reform options, including the flat tax and national sales tax. A new reform plan, a dual-rate income tax, is also proposed. Edwards argues that the dual-rate tax plan would eliminate distortionary tax breaks, and reduce and equalize marginal tax rates on wages and capital income. Under the plan, nearly all U.S. households would pay income tax at a low marginal rate of just 15 percent.
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