Enrico Colombatto
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Enrico Colombatto
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Opinion: The perfect tax (other than zero) Part III

Opinion: The perfect tax (other than zero) Part III

Refined regime Even if one accepts that radical tax reform is a political nonstarter, it is still important to put forward such projects as forcefully as possible. The reason is that they can serve as a benchmark for evaluating our current dysfunctional tax systems. In addition, these reform proposals can be refined and sharpened in three respects. First, it helps to be explicit about the…

Opinion: The perfect tax (other than zero) Part II

Opinion: The perfect tax (other than zero) Part II

Modest proposals Free-market proposals suggest eliminating personal and corporate income taxes, replacing them with value-added tax (VAT) or a tax on consumption. Progressivity could be maintained by giving all taxpayers a guaranteed, fixed-sum subsidy. In the U.S. context, a VAT rate of about 20 percent would be sufficient to replace revenue from federal income tax. Governments do not like…

Opinion: The perfect tax (other than zero) Part I

Opinion: The perfect tax (other than zero) Part I

Tax systems are under scrutiny in many Western countries. Taxpayers complain because tax pressure is high and governments squander their money. Moreover, they deplore the system’s complexity and lack of transparency. For example, nobody really knows what share of the revenue goes to finance the goods and services produced by government agencies, and how much is used to provide relief to…

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