Fair Not Flat: How to Make the Tax System Better and Simpler

194 Pages·2008·0.842 MB·English

by  McCaffery, Edward J

F A I R N O T F L A T

FAIR
NOT
FLAT
HOW TO MAKE THE TAX SYSTEM
BETTER AND SIMPLER
Edward J. McCaffery
THE UNIVERSITY OF CHICAGO PRESS • CHICAGO AND LONDON
EdwardJ.McCafferyistheMauriceJonesJr.ProfessorofLawat
theUniversityofSouthernCaliforniaLawSchoolandVisiting
ProfessorofLawandEconomicsattheCaliforniaInstituteof
Technology.HeistheauthorofTaxingWomen(1997),also
publishedbytheUniversityofChicagoPress.
TheUniversityofChicagoPress,Chicago60637
TheUniversityofChicagoPress,Ltd.,London
2002byEdwardJ.McCaffery
Allrightsreserved.Published2002
PrintedintheUnitedStatesofAmerica
11100908070605040302 12345
ISBN:0-226-55560-7(cloth)
LibraryofCongressCataloging-in-PublicationData
McCaffery,EdwardJ.
Fairnotflat:howtomakethetaxsystembetterand
simpler/EdwardJ.McCaffery.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN0-226-55560-7(cloth:alk.paper)
1.Spendingstax—UnitedStates. 2.Incometax—United
States. 3.Taxation—UnitedStates. I.Title.
HJ5715.U6M222002
336.2′05′0973—dc21
2001043391
(cid:1)∞ Thepaperusedinthispublicationmeetstheminimum
requirementsoftheAmericanNationalStandardforInformation
Sciences—PermanenceofPaperforPrintedLibraryMaterials,
ANSIZ39.48-1992.
To Cathleen and Allegra, with love

C O N T E N T S
list of tables and figures ix
acknowledgments xi
introduction
Time for a Change
1
one
Tax Basics
9
two
The Trouble with the Income Tax
27
three
The Case for a Spending Tax
45
four
Death to Death Taxes
62
five
Progressivity Can Live
78
vii
viii contents
six
The Fair Not Flat Tax
97
conclusion
Toward Class Teamwork, Not Class Conflict
112
questions and comments about
the fair not flat tax 117
glossary of key terms 161
further reading 167
index 171
T A B L E S A N D F I G U R E S
TABLES
1.1 SuggestedFair NotFlatTaxRateScheduleforaFamilyofFour 26
3.1 ATypicalFlat-TaxRateSchedule 52
3.2 NationalSalesTaxwithRebate 54
5.1 Bedrock’sTaxRateSchedule 79
5.2 Income,Payroll,andCombinedMarginal TaxRates(approx.) foran
Individual, circa2001 82
5.3 Income,Payroll,andCombinedMarginal TaxRates(approx.) fora
Family ofFourwithTwoEqualEarners,circa2001 83
5.4 Bedrock’sFlatTaxplusRebate 84
5.5 FairNotFlatTaxRateScheduleforaFamily ofFour 91
5.6 FairNotFlat, Payroll,andCombinedTaxRatesforaFamily ofFour 93
6.1 RateSchedulefor theSupplementalPersonalConsumptionTaxfora
Family ofFour 101
6.2 Liberal,Conservative,andFairNot FlatTaxPolicies 103
FIGURES
1.1 IncomeandConsumptionoveraLifetime 17
5.1 EffectofFlatTaxplusRebate 84
ix