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Edward J. McCaffery, (Chicago: University of Chicago Press, 2002), 178 pages
For several years now, Edward McCaffery has been writing a number of scholarly articles advocating the repeal of the US gift and estate tax and the introduction of a progressive consumption tax in place of the current income tax.(1) In this short book, McCaffery presents a popular version of these arguments, proposing a "fair not flat" tax as an alternative both to the current US tax system and to other proposals for radical tax reform.
In addition to a brief introduction in which McCaffery denounces the current income tax and outlines the basic features of his proposal, the book comprises six chapters, a brief conclusion, and an appendix recapping his arguments in a question-and-answer format. The first chapter presents the "basics" of the US tax system, reviewing the history of the modern income tax from its introduction in 1913, emphasizing the substantial role played by federal payroll taxes, and explaining the distinction between income and consumption as potential tax bases. Chapter 2 develops McCaffery's case against the income tax, which he regards as complex, inefficient, and unfair--complex because of the realization requirement and the US rule permitting a step-up of basis on death; inefficient because it distorts choices between saving and spending;...