Implications for U.S. trade and competitiveness of a broad-based consumption tax.

Publisher: U.S. International Trade Commission in Washington, DC

Written in English
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  • Competition, International.,
  • Spendings tax -- United States.,
  • United States -- Commerce.

Edition Notes

SeriesPublication -- 3110, USITC publication -- 3110.
ContributionsUnited States International Trade Commission.
The Physical Object
Pagination1 v. (various pagings) :
ID Numbers
Open LibraryOL22953491M

The idea, on the part of some analysts and lawmakers, has been eventually to eliminate the income tax and replace it with a broad-based sales tax on both goods and services. In other words, the idea is to replace the current income tax, with a base of both consumption and savings, with a tax that has only consumption in the taxable base. Corporate Income Taxes. In addition to the federal corporate income tax rate, many U.S. states levy corporate income taxes of their own. Economists have long understood that corporate income taxes are double taxes, since the same income is taxed once as profit, and once as individual income when distributed as dividends to shareholders. a consumption tax. Grubert and Mackie () adopt the same reasoning in arguing that financial services should not be taxed under a consumption tax, and Quiggin () mentions a similar point briefly in passing. The analysis of this note is The Treatment of Financial Services under a Broad–Based Consumption Tax William Jack Department of.   The U.S. government used a consumption tax for much of our history before replacing it with an income tax. The Bush administration backed a version of .

Leading experts on tax policy examine the complex issues involved in fundamental tax reform, including the relative merits of income-based and consumption-based taxation. Reform of the federal income tax system has become a perennial item on the domestic policy agenda of the United States, although there is considerable uncertainty over specifics. FairTax was a single rate tax proposal in , and in the United States that includes complete dismantling of the Internal Revenue Service. The proposal would eliminate all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes, replacing.   The U.S. has million small businesses that percent of the private workforce. And finally, exports help domestic companies gain a competitive advantage. Through exporting, they learn to produce a variety of globally-demanded goods and services. A consumption tax could also be collected at the retail level as a retail sales tax on final consumption. (A retail sales tax exempts, in theory, the sale of intermediate goods including capital goods to be used in a business). Or it could be collected at each stage of the production process in the form of a value-added-tax .

30 U.S. International Trade Commission, In addition to providing aggressive tax incentives, 54 Taiwan’s innovation policy seeks to strengthen the lead role of the private sector by generating new public-private partnerships and by coordinating Implications for U.S. Competitiveness and National Security outlines the technical.   concern to businesses under any new consumption tax; (2) problems that consumption taxation can pose for housing, financial institutions, charitable organizations, and state and local governments; and (3) implications for financial statements. .

Implications for U.S. trade and competitiveness of a broad-based consumption tax. Download PDF EPUB FB2

Of the implications for U.S. trade and competitiveness of replacing the current income-tax system with a broad-based consumption tax. Specifically, this report summarizes the various consumption-tax proposals, reviews the current economic analyses of this topic, and provides a discussion of the key technical issues that can significantly affect.

Get this from a library. Implications for U.S. trade and competitiveness of a broad-based consumption tax. [United States International Trade Commission.;]. Implications for U.S. trade and competitiveness of a broad-based consumption tax.

By United States International Trade Commission. Abstract. Mode of access: Internet Topics: Spendings tax, Competition, International. Publisher: Author: United States International Trade Commission.

IMPLICATIONS OF INTRODUCING A BROAD-BASED CONSUMPTION TAX William M. Gentry and R. Glenn Hubbard Columbia University and N.B.E.R. EXECUTIVE SUMMARY As a tax base, "consumption" is sometimes argued to be less fair than "income" because the benefits of not taxing capital income accrue to high income households.

Broad-Based Consumption Tax Reform: The Economics and Politics of Its Equity Implications International Tax Journal (United States), 29(1), Cited by: 2. is likely to be more effective in improving the competitiveness of the U.S.

business tax system than addressing specific issues outside of broad-based business tax reform. A fundamental question is the extent to which any of these approaches would markedly affect the competitiveness of U.S. businesses.

Lowering the business tax rate. The US tax system places US multinationals at a competitive disadvantage with foreign-based multinationals that have income from low-tax countries.

US companies now face a percent minimum tax on global intangible low-taxed income, defined as global profits above 10 percent of tangible capital.

7 In our dataset, which represents a sample of over 90 % of all U.S. trade from93% of U.S. imports and 94% of U.S.

exports are with count ries implementing value-added taxe s. We use. does not address implications of a hypothetical U.S. value-added tax. We only consider evidence regarding the impact of existing tax regimes of U.S. trade partners, including VATs, on U.S. trade competitiveness, Implications for U.S.

trade and competitiveness of a broad-based consumption tax. book as a relative improvement in exports over imports. Specifically, we ask whether VATs in other countries of the world affect U.S. We proxy tax rates with tax ratios (also known as average effective tax rates, i.e., AETRs).

We update the tax ratio dataset, originally developed by Mendoza, et al. () and expanded by Carey and Rabesona () among others, to include 25 OECD countries from to We use gravity models to estimate tax impacts on bilateral trade flows.

hinder economic efficiency. Proponents of consumption taxes argue that a broad-based consumption tax could replace the federal income tax, raising requisite revenue while improving economic efficiency, and increasing economic output.

Broadly, taxes tend to distort individual decisions by altering price signals within the economy. Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade.

Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods. In more detail, the benefits of free trade include: 1. Distributional Implications of Introducing a Broad-Based Consumption Tax William M.

Gentry, R. Glenn Hubbard. Chapter in NBER book Tax Policy and the Economy, Volume 11 (), James M. Poterba, editor (p. 1 - 48) Conference held Octo Published in January by MIT Press in The Tax Policy and the Economy Series.

A nation that gains from trade will find its consumption point being located: studies indicate that over the past two decades the cost of international transportation relative to the value of U.S. imports has: emphasizing changes in the trading position of the competitiveness.

U.S. tariffs have taxed $ billion of Chinese goods since February ; virtually everything China sells to America is subject to Trump’s trade war with the world's most populous country.

Nevertheless, a U.S. business operating in, shipping goods or transferring intellectual property or providing or receiving services to and from other countries must consider the VAT implications of exports to or imports from those countries. This book explores value added and other consumption tax principles from a comparative perspective.

similar consumption tax calculated as a per cent of the total monthly bill. Some countries also charge an additional special communications tax as a per cent of the service bill.

Finally, some countries also charge a fixed tax that could be either driven by general communications or wireless usage. trade and investment, tax regimes and tax rates can potentially have a significant influence on decisions about the location of production and investment.

Section C accordingly explores notions of ‘international tax competitiveness’ and how they interact with other desiderata for tax regimes: raising sufficient revenues, fairness. A consumption tax is a tax levied on consumption spending on goods and services. The tax base of such a tax is the money spent on ption taxes are usually indirect, such as a sales tax or a value-added r, a consumption tax can also be structured as a form of direct, personal taxation, such as the Hall–Rabushka flat tax.

Governments will choose to implement taxes to either individuals or firms in order to increase its revenue. When considering taxes to firms, it must be noted that these taxes will increase the price of goods being produced and sold, which translates into a welfare r, a distinction between the loss in consumer and producer surplus must be made.

treatment of saving or investment. The tax base of a broad-based individual income tax includes wages, interest, dividends, and capital gains, as well as income generated by a taxpayer-owned business.

All uses of income-whether consumption or saving-are taxed. Under a business income tax, income attributable to the owners of the. "Distributional Implications of Introducing a Broad-Based Consumption Tax." Tax Policy and the Econ no.

1 (): Each author name for a Columbia Business School faculty member is linked to a faculty research page, which lists additional publications by that faculty member. impose some form of broad-based tax on consumption at the national level.' Over seventy nations now rely on a value-added tax ('VAT") as a significant source of national revenue.2 Members of Congress and at least two administrations over the past fifty years have introduced bills or considered a federal sales or value-added tax.

Office of the U.S. Trade Representative, “Findings of the Investigation Into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under.

For example, with a carbon tax of CAD10 per tonne of CO 2 equivalent, the basic chemical manufacturing sector, one of the most emissions-intensive and trade-exposed industries, experiences the largest decline in employment (30 percent), 27 while the health care industry experiences a 16 percent increase in employment, which the author.

Dissatisfaction with the federal tax system has led to a debate about U.S. tax reform, including proposals for a national consumption tax.

One type of proposed consumption tax is a value-added tax (VAT), widely used around the world. A VAT is levied on the difference between a business’s sales and its purchases of goods and services. Typically, a. Spoiler alert: Cardin pays for the impressive rate reduction with a broad-based federal consumption tax.

Make no mistake -- this is a VAT. The details of the PCT Act sound vaguely familiar. COVID Resources. Reliable information about the coronavirus (COVID) is available from the World Health Organization (current situation, international travel).Numerous and frequently-updated resource results are available from this ’s WebJunction has pulled together information and resources to assist library staff as they consider how to handle coronavirus.

CPA asserts that U. “trade competitiveness would be substantially improved because exports are freed from both the GST and payroll tax burden. Imports never include the cost of the U. payroll tax, but would pay the GST. This effect has been called Fiscal Devaluation because it mimics a currency devaluation for trade purposes.

and save $20, the taxpayer pays the consumption tax only on the $80, whereas the taxpayer is taxed on $, in an income tax system that is based upon income that is earned from capital or labor. This may sound similar to a sales tax but, in its purest form, a consumption tax will not become regressive as in the case of a pure sales.

Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its member countries.

Please send orders to: International Monetary Fund, Publication Services. P.O. BoxWashington, DCU.S.A. Congressional Budget Office recently issued a report highlighting this policy option to possibly help reduce the U.S. budget deficit. An introduction of a .This section will show how a consumption tax can cause trade for a small, perfectly competitive, open economy.

In other words, even if countries were identical with respect to their resource endowments, their technology, and their preferences and even if there were no economies of scale or imperfectly competitive markets, a purely domestic policy, such as a consumption tax, can induce trade.