When confronted with large refund claims by businesses that have paid unconstitutional or otherwise illegal taxes, state governments sometimes invoke a pass-on defense, arguing that businesses have passed on at least part of the tax to consumers in the form of higher prices and should not...

Congress has recently considered taxing the carried interest of private equity fund managers at ordinary rates rather than at the 15 percent rate that currently applies to a portion of this income. The proposed change is intended to promote neutrality between the labor compensation of fund...

Many economists favor revenue-neutral reforms that broaden the corporate tax base and lower the statutory tax rate. Economic analysis provides partial, but not complete, support for this view. Welfare gains do not arise from a lower tax rate as such, but from leveling the playing field between...

Alan D. Viard reviews "Institutional Foundations of Public Finance: Economic and Legal Perspectives" by Alan J. Auerbach and Daniel N. Shaviro. In his opinion, the book is exceptionally well suited to serve as a tribute to David Bradford. The authors and discussants address the questions that...

Alan D. Viard of American Enterprise Institute reviews, "The Benefit and the Burden: Tax Reform -- Why We Need It and What It Will Take" by Bruce Bartlett. According to Viard, the book offers a highly readable overview of the federal tax system and key tax policy issues. While experts will...

In this article, I discuss the enactment, structure, and economic implications of the UIMC. Despite its statutory name, the income to which the UIMC applies is not unearned and the tax is not a contribution to Medicare. Contrary to the bizarre myth circulating on the Internet, the UIMC is not a...

Actual state and local sales taxes diverge dramatically from the popular and textbook vision of the tax. One major flaw is the exclusion of a wide range of consumer services from taxation, which renders the consumer tax base much narrower than the textbook description suggests. The other crucial...

In the inaugural issue of Marginal Impact last June, I criticized state and local sales taxes for taxing a significant number of business purchases. Even as I said that sales taxes were overboard along that dimension, I also observed that they were overly narrow along another dimension, because...

In previous articles, I examined two typical features of state and local retail sales taxes that prevent them from functioning as comprehensive taxes on consumption: the taxation of business purchases and the exemption of consumer services. In this article, I examine another feature, the...

In this article, we analyze an alternative, more sweeping approach to California tax reform. We examine the complete replacement of personal and corporate income taxes and the current sales tax with a broad-based consumption-oriented retail sales tax, accompanied by rebates to address...