by Alan D. Viard, Robert Carroll
American Enterprise Institute
March 05, 2012
The United States is alone among industrialized countries in having no broad-based consumption tax at the national level. Yet, economic analysis suggests that consumption taxation is superior to income taxation because it does not penalize saving and investment. The X-Tax Revisited proposes to completely replace the income tax system with a progressive consumption tax, known as the “X-tax.” It sets forth solutions to commonly perceived problems concerning the taxation of pensions and fringe benefits, business firms, financial intermediaries, international transactions, owner-occupied housing, state and local governments, and nonprofit institutions. By adopting these approaches, the United States can move to a progressive tax system that no longer penalizes saving and investment.

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