Three prominent tax reform options can significantly reduce the tax penalty on saving and investment while maintaining a progressive federal tax system: partially replacing the income tax system with a value added tax, fully replacing the income tax system with a Bradford X tax, or fully replacing it with a personal expenditure tax. This paper compares the options’ implications for economic growth, progressivity, transitional wealth effects, business taxation, public and private transfer payments, international transactions, and the non-business sector and the options’ political viability. The paper also outlines a hybrid option.
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