Skip to content

Alvin Warren, Would a Consumption Tax be Fairer Than an Income Tax? 89 Yale L.J. 1081(1980).


Abstract: The consensus that culminated in the adoption of the Sixteenth Amendment and the enactment of the federal income tax has been under attack in both academic and professional circles for several years. The view that consumption, not income, is the fairer basis on which to levy a progressive personal tax can be found in recent law reviews,' economic journals, and Treasury Department study papers, as well as the reports of commissions created to review the tax structures of the United Kingdom and Sweden. And signifying the growing respectability of what is a very old idea among economists, the Brookings Institution has recently sponsored a conference of experts to review the theoretical and practical considerations involved in a personal tax on consumption. The argument that the consumption tax is to be preferred as a matter of fairness has generally involved a comparison of the core ideas of the two taxes-income and consumption. Wealth-the third traditional candidate for taxation on the basis of economic resources-has typically been left out of the comparison on the ground that whatever considerations would support wealth taxation can best be taken into account by enacting a tax on wealth or transfers of wealth, and that those quite distinct considerations should not obscure the direct comparison of the income and consumption taxes on equity grounds. This Article examines the case for consumption-tax superiority in those terms. In keeping with the focus on the core ideas of income and consumption, practical compromises that are necessary to the implementation of the taxes and that can certainly raise questions of fairness are generally not discussed. Rather, this Article is meant to be directly responsive to arguments that the income tax is unfair in basic concept, quite apart from the difficulties that might arise in implementing that concept.