The USA Tax: A Progressive Consumption Tax

Although proposals for "flat" taxes have received a good deal of attention, a majority of Americans say that, for reasons of fairness, they favor a progressive tax. The U.S.A. Tax: A Progressive Consumption Tax presents an alternative to both the present tax system and a flat tax. The U.S.A. (unlimited savings allowance) tax is a progressive consumption tax that differs fundamentally from our current tax structure in that it taxes consumption rather than income. In April 1995, the U.S.A. tax bill was introduced into the United States Senate. Whatever the fate of the bill, this book is an important contribution to the literature on the theory and design of a progressive consumption tax. The U.S.A. tax has two components-the household tax, which replaces the current household income tax, and the business tax, which replaces the corporate income tax. A fundamental purpose of the U.S.A. tax is to raise the level of national saving and investment. It accomplishes this by making all household saving and business investment in capital goods tax-deductible.Seidman describes the ideals on which the U.S.A. tax is founded: the household component is based on the progressive personal consumption tax, and the business component is based on the consumption-type value-added tax (V.A.T.). He then shows how the version of the U.S.A. household tax presented in the 1995 bill differs in critical aspects from the ideal of a personal consumption tax, and how it can be improved by amendments.Seidman devotes most of his book to the impact on saving, the issue of fairness, practical design options, simplification, and a variety of questions and criticisms. The book, written in straightforward language, will help guide the non-economist through the coming debates on the U.S.A. tax.