Abstract
Whether to tax households based on their income or on their consumption is one of the central and long-standing questions of tax design. Most developed nations rely on a combination of income and consumption taxes to raise revenue. The debate over alternative tax bases involves both philosophical arguments about what constitutes a fair measure of ability to pay and economic arguments about the relative efficiency of different tax bases. Consumption taxes can be implemented in a variety of ways, including value added taxes, retail sales taxes, and savings-exempt income taxes.
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Poterba, J.M. (2018). Consumption Taxation. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_278
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DOI: https://doi.org/10.1057/978-1-349-95189-5_278
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