The death of the income tax : a progressive consumption tax and the path to fiscal reform

__The Death of the Income Tax__ explains how the current income tax is needlessly complex, contains perverse incentives against saving and investment, fails to use modern technology to ease compliance and collection burdens, and is subject to micromanaging and mismanaging by Congress. Daniel Goldberg proposes that the solution to the problems of the current income tax is completely replacing it with a progressive consumption tax collected electronically at the point of sale. The income tax is structurally flawed. As Part I of the book explains, some of the flaws are inherent in the income tax and some are self-inflicted. The income tax is needlessly complex, contains perverse incentives against saving and investment, fails to use modern technology to ease compliance and collection burdens, and is subject to micromanaging and mismanaging by Congress. These problems, in turn, lead to noncompliance with the income tax resulting in hundreds of billions of dollars of tax revenue not collected each year, and to large costs required to run the tax system. This book proposes that the solution to the problems of the current income tax is to abandon it and completely replace it with a progressive consumption tax collected electronically at the point of sale, which the book calls e-Tax. e-Tax is based on a European-style, credit value added tax (VAT) because with modern technology a VAT can be collected electronically and automatically. e-Tax builds in progressivity at the wage-earner level. It combines straightforward concepts with appropriate use of technology to achieve ease, efficiency, and assurance of compliance and collection. In developing and discussing e-Tax, Part II of the book explains how a tax on consumption will serve the country better than a tax on income. The current tax system is an eclectic income tax/consumption tax system already and an efficient and leak-proof tax system is best designed as a point of sale tax on transactions as they occur Cover 1 Contents 8 List of Figures 10 List of Tables 12 Preface 14 Acknowledgments 16 PART ONE: The Problem: The Income Tax Is Broken 18 1. What Is the Income Tax and Why Is It Broken? 20 2. Taxing Income Is a Flawed Concept 32 3. Tax Planning under the Income Tax 45 4. Progressive Taxation 62 5. Tax Expenditures 73 Appendix to Chapter 5. Appendix Kingdom of PAL: A Parable of Tax Expenditures, Tax Shelters, and the Passive Activity Loss Rules 105 6. The Alternative Minimum Tax (AMT): An Admission of Failure 118 7. The Intractable Problem of Tax Cheating 129 8. The Deadweight Cost of the Personal Income Tax 147 PART TWO: The Solution: A Progressive Consumption Tax 154 9. Tax Consumption Instead of Income 156 10. Individual-Level Consumption Taxes 164 11. Business-Level Consumption Taxes 178 12. The Current Internal Revenue Code: An Income Tax, a Consumption Tax, or a Hybrid? 189 13. An Introduction to an Integrated Two-Tier Consumption Tax 206 14. e-Tax: An Electronically Collected Progressive Consumption Tax as the Successor to the Income Tax 216 15. e-Tax Redux: Special Considerations 236 16. Transition to e-Tax 253 Conclusion and Prospects for Change 269 Appendix A. Tax-inclusive Rate vs. Tax-exclusive Rate and Gross-up 274 Notes 278 Index 318 A 318 B 319 C 319 D 322 E 323 F 324 G 325 H 325 I 326 J 327 K 327 L 327 M 328 N 328 O 328 P 328 Q 329 R 329 S 330 T 332 U 334 V 334 W 335 X 335 Y 335 Z 335 This Book Proposes That The Solution To The Problems Of The Current Income Tax Is To Abandon It And Completely Replace It With A Progressive Consumption Tax Collected Electronically At The Point Of Sale, Which The Book Calls E-tax. E-tax Is Based On A European-style, Credit Value Added Tax (vat) Because With Modern Technology A Vat Can Be Collected Electronically And Automatically. What Is The Income Tax And Why Is It Broken? -- Taxing Income Is A Flawed Concept -- Tax Planning Under The Income Tax -- Progressive Taxation -- Tax Expenditures -- The Alternative Minimum Tax (amt) : An Admission Of Failure -- The Intractable Problem Of Tax Cheating -- The Deadweight Cost Of The Personal Income Tax -- Tax Consumption Instead Of Income -- Individual Level Consumption Taxes -- Business Level Consumption Taxes -- The Current Internal Revenue Code : An Income Tax, A Consumption Tax, Or A Hybrid? -- An Introduction To An Integrated Two-tier Consumption Tax -- E-tax : An Electronically Collected Progressive Consumption Tax As The Successor To The Income Tax -- E-tax Redux : Special Considerations -- Transition To E-tax. Daniel Goldberg. Includes Bibliographical References And Index.