Prospects for Consumption-Based Tax Reform in the United States

Zodrow, George R.

doi:10.1628/0015221032643146

Cited by 4 publications

(2 citation statements)

References 57 publications

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“…Gratz (2007) reports that the final distribution of the 1986 federal tax reform was essentially neutral in order to gain political acceptance. Potential changes in the distribution of the burden have also undermined the efforts to move to a flat tax in the United States (Zodrow 2002, 2003).…”

Section: Utah Individual Income Tax Reformmentioning

confidence: 99%

Personal Income Tax Revenue Growth and Volatility

Cornia

Johnson²,

Nelson

2016

Public Finance Review

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In order to reduce the volatility of the personal income tax in Utah, review and reform efforts recommended a simple flat tax that disallowed all deductions or exemptions. Among the reasons for the recommended flat tax was the argument that it would result in a more stable year-over-year tax revenue stream. This was especially important for education financing. The tax system that was finally adopted retained exemptions and deductions through a tax credit. Using a series of simulations based on twenty-one years of tax returns, we establish that by retaining exemptions and deductions, tax reform efforts failed to appreciably reduce the volatility of personal income tax revenues. These simulations also show that the initially proposed flat income tax with no exemptions or deductions would have decreased volatility at the cost of reducing the growth rate. This study contributes insights, caveats, methodology, and potential alternatives for future individual income tax reforms by focusing on the growth and volatility of three different tax systems.

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Section: Utah Individual Income Tax Reformmentioning

confidence: 99%

Personal Income Tax Revenue Growth and Volatility

Cornia

Johnson²,

Nelson

2016

Public Finance Review

View full text Add to dashboard Cite

show abstract

“…This gain is positive under an income tax where t > 0, but it is zero under a cash flow tax that effectively leaves the normal return to capital free of tax. 21 The problems involved in the transition to cash flow taxation are carefully discussed by Zodrow (2002Zodrow ( , 2003 and Bradford (2004).…”

Section: Taxing Rents: a Source-based Cash Flow Business Tax?mentioning

confidence: 99%