Wednesday, May 29, 2013
Johnson argues that a VAT will increase the harm that taxes do by shifting the tax burden from high-income earners to low-income earners and will require a whole new and complicated administrative apparatus in Washington and every business. A cash flow consumption tax entails less added administration and allows easier adjustment to progressive tax rates. Johnson argues that the case for any consumption tax is weak, because taxpayers either do not save more when tax on capital goes down or they save less. He says that to increase revenue, Congress must repair the income tax base — for instance, with Shelf Project proposals.
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