Rather than taking a piecemeal approach, making small changes to particular provisions of the tax code, comprehensive reform would address the inequities, complexities, and inefficiencies...
Broadening the Income Tax Base Base broadening involves increasing the portion of income subject to taxation. It is often accompanied by proposals to decrease tax...
Expanding the definition of taxable income by removing or restructuring tax preferences could significantly increase revenue. In fact, the President’s Advisory Panel on Federal Tax...
The President’s Advisory Panel on Federal Tax Reform estimated how much marginal tax rates could be reduced under a broad-based income tax that generated the...
Retail sales are business sales to households; neither business-to-business nor household-to-household transactions qualify. For example, the sale of a newly constructed home to a family...
Under a pure national retail sales tax, all consumption expenditures by individuals and by federal, state, and local government agencies would be subject to the...
Advocates of the national retail sales tax claim that tax avoidance and outright evasion would decline, and that tax revenue collected from the underground economy...
Constructed as a flat-rate consumption tax with a universal demogrant (cash payment) for needy families, the proposed national retail sales tax contains many features that...
Many countries have attempted to implement national retail sales taxes or variants, such as wholesale-level taxes or “ring” taxes (retail sales taxes with exemptions for...
The President’s Advisory Panel on Federal Tax Reform’s first objection to replacing the current tax system with a national retail sales tax hinges on the...
“Value added” is the difference between business sales and purchase of goods and services from other businesses. It represents the sum of wages, other labor...
Credit-Invoice Method Most countries with a value-added tax (VAT) use the credit-invoice method. All sales by businesses are taxable, but sellers pass invoices on to...
In principle, the tax base of a value-added tax (VAT) is all consumption. Most VAT systems, however, exclude certain items from taxation. Some items typically...
Zero Rating Almost all countries apply preferential rates to some goods and services, making them either “zero rated” or “exempt.” For a “zero-rated good,” the...
Most countries exempt small businesses from a value-added tax (VAT)—partly because small businesses are a powerful political constituency and partly because the administrative and compliance...
If the value-added tax (VAT) replicates the effect of a well-functioning sales tax, why not just enact a retail sales tax? Retail sales taxes suffer...
The Hall-Rabushka flat tax would replace the current income tax system with a consumption tax. Their system is a two-part value-added tax (VAT). All value...