The benefit and the burden - Tax Reform

Why we need it and what it will take
by Bruce Bartlett
isbn: 978-1-4516-4619-1
Very interesting book.

Notes below:
He "believes that federal revenues will need to rise as a share of GDP in coming years to pay for the cost of an aging society and stabilize the nation's finances."...."it would be better to raise those additional revenues by taxing consumption rather than raise tax rates."

After each chapter he had additional sources that you can read.

He gives a good overview of the history of federal income taxation.

3 variables regarding taxation
income/ consumption
tax unit; individual/ family
time period

We're the only country that taxes its citizens where-ever they live, even if all their income is earned outside the United States.

The exclusion for employer provided health insurance is far and away the largest of all tax expenditures.

"double taxation of income earned in the corporate sector discourages the payment of dividends."

Good overview of tax reform history

Both [parties]... believe that government should raise enough revenue to cover its legitimate functions. The question is.... what are the legitimate functions of government?

All taxes have what economists call a "deadweight" or "welfare" cost over and above the tax itself in the form of output discouraged by the form of the tax rather than its amount.....It is estimated that the deadweight cost of the federal tax system is equal to about one-third of revenue raised or about 5 percent of the gross domestic product.

Economists have long know that taxes on consumption, such as excise taxes or retail sales taxes, have a lower deadweight cost than taxes on incomes or profits.

Thomas Hobbes.. argued that consumption is what people take out of society while saving is what they put in.....Alexander Hamiliton...argued... that taxation of consumption is more consistent with freedom than taxes on incomes because people can more easily reduce their consumption than their income if taxes become excessively burdensome.

One problem with consumption taxes, however, is that evasion is relatively easy....Economists have long observed that retail sales taxes such as those in the states become too difficult to collect above a rate of about 10 percent. Another problem ... is.. "cascading,", taxes levied on taxes rather than on goods and services.

Good discussion of pros and cons of VAT

"What is so far lacking in the tax reform effort is a compelling reason to enact any actual reforms."