A Review of the Second Edition of The Flat Tax by Robert E. Hall and Alvin Rabushka (Hoover Institution Press, pages, $ paperback), and published in. Download Citation on ResearchGate | Flat tax: An overview of the hall-rabushka proposal | The concept of replacing the current U.S. income tax system with a. 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.

Author: Samugore Grozil
Country: Indonesia
Language: English (Spanish)
Genre: Life
Published (Last): 11 August 2007
Pages: 244
PDF File Size: 10.24 Mb
ePub File Size: 15.6 Mb
ISBN: 302-7-15502-620-6
Downloads: 7941
Price: Free* [*Free Regsitration Required]
Uploader: Sall

Most publications may be downloaded free of charge from the web site and may be used and copies made for research, academic, policy or other non-commercial purposes. The Hall—Rabushka flat tax may include an exemption, which allows the tax to tad progressivity.

Surely, the strongest argument for exempting old capital from taxes is fairness. The Hall-Rabushka proposal could be amended in several ways.

Allowing for transition relief alone is enough to reduce the impact on growth to zero in the long run. Altig, David, et al. The estimates also show that, even for welldesigned consumption taxes, efficiency losses are possible. The flat tax would eliminate corporate income taxes, put flatt businesses on an equal tax footing, reduce the statutory tax rate applied to business income, and make investment write-offs more generous.


Evaluating the effects of adopting a flat tax Analysts find it hard to predict with precision the effects of minor tax changes, and heated debate continues about the effects of the major s tax reforms. About half of private savings already receive consumption tax treatment. Removing the mortgage interest twx and the deductibility of state and local property taxes may have profound effects on housing prices and home ownership, but the results would depend on how interest rates adjust, the sorts of grandfathering rules that are introduced, and other factors.

Moreover, many simplification gains could be made through changes in the income tax. The return on these investments, then, is the pretax rate of return.

Idealized consumption taxes may always look better than actual income tax systems. This article needs additional citations for verification.

A third concern is how reform would affect different sectors of the economy. Hoover Institution Press,p. The business tax would be set equal to the highest tax rate on wage income.

Flat Tax: An Overview of the Hall-Rabushka Proposal

A consumption tax taxes saving only once: Ten years hence, we may find that what started as simplicity has once again become a confused jumble. Order online at www. But at the high end of the income distribution, the tax is regressive, just like sales taxes and VATs. Ebel, and Jane G.

Latest Research Browse by Author.

Flat Tax: An Overview of the Hall-Rabushka Proposal

Second, the estimates provided do not allow for child exemptions, as the Hall-Rabushka proposal and all of the recent flat tax proposals do. And fundamental tax reform would not end the demands for special treatment that have so tangled the income tax. Please help improve this article by adding citations to reliable sources. Even if a consumption tax is the right system for an economy starting from scratch, it may not be the right ravushka to reform an existing system.


First, a onetime implicit tax on existing capital is very progressive. But those older households have received transfers through Social Security and Medicare that far outreach what they have put in.

Economic Effects of Fundamental Tax Reform. The answer may not be as obvious as it seems.

Hall–Rabushka flat tax – Wikipedia

Second, pension coverage could fall. Thus some simplification is likely with tax reform, but it is by no means a certain or lasting outcome. A proposal for fundamental tax reform that would replace the income tax system with a consumption tax, to be collected by levying a flatt tax on businesses and individuals.

Research Academic Mihir A.