Progressive Consumption Taxes April 26, 2011
I agree with Frank, not with Henderson. I have a lot less problem with progressive consumption taxes on the rich than with progressive income taxes. That way if the rich use their money constructively, for capital investment, saving, or philanthropy, they are less likely to be penalized for making the money. Note that consumption or sales taxes, if equal on all items, tend to be ‘regressive,’ since the less affluent usually spend a higher portion of their incomes. If we want to soak the rich, it’s less unhealthy to do so when they are spending it on bling than when they are making or receiving it in the first place.
Related: “Robert Frank’s Strange Case for Taxing The Rich” by David R. Henderson at Cato.org