Pro-growth and progressive tax reform: A closer look at the X tax

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Post-Event Summary
AEI scholar Alan D. Viard formally unveiled his new book, "Progressive Consumption Taxation: The X Tax Revisited," co-authored with Robert Carroll of Ernst & Young, to a packed room on Capitol Hill on Monday. The book proposes replacing the current income tax system with the X tax, a progressive consumption tax developed by the late Princeton professor David Bradford. The authors provide not only a detailed description of the X tax and persuasive arguments to support consumption tax reform but also suggestions for smoothly implementing their ideas.

 


In his remarks, Viard emphasized the main advantages of the X tax -- that, unlike the income tax, it does not penalize saving and investment and that it maintains progressivity in the tax system by taxing firms and high-paid workers at higher rates than other workers. He also argued that implementing a consumption tax alongside the current income tax system would not be ideal because it would minimize the simplicity and growth gains of the switch to the X tax while providing the government with an additional revenue source to exploit.

Following Viard's remarks, the Cato Institute's Chris Edwards pointed out that the book provides a highly informative discussion of the fundamentals of tax reforms that would benefit anyone seeking to learn more about the basic economics of the issue. James Mackie of the U.S. Department of the Treasury analyzed the distributional effects of adopting the X tax, focusing particularly on transition relief. Overall, both discussants applauded the authors' work.

 

Event Description
The X tax, first proposed by Princeton University economist David Bradford, is a progressive consumption tax that offers a game-changing solution to the tax problems that have hampered the U.S. economy and poisoned its political system. Replacing America’s current income tax system with the X tax would remove tax penalties on saving and investment while maintaining progressivity.

“Progressive Consumption Taxation: The X Tax Revisited,” which was written by Alan Viard and Robert Carroll and will be released on June 4th, is the most thorough analysis of the X tax available. It tackles the difficult issues of transition and implementation that are often glossed over in big-think conversations about tax reform. At this event, Alan Viard will present the X tax proposal while James Mackie of the U.S. Department of the Treasury and Chris Edwards of the Cato Institute will offer commentary.

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Alan D.
Viard

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