State and Local Fiscal Policy
Show Less

State and Local Fiscal Policy

Thinking Outside the Box?

Edited by Sally Wallace

In this broad and illuminating work, experts on public finance discuss innovations in state and local tax policy that have been implemented or considered over the course of the last three decades. The authors provide original work that analyzes whether state and local governments have ‘gone outside the box’ to deal with the strains of current public finances or have gotten along by adhering to the status quo. This book provides researchers, students and policy makers with evaluations and analyses by well-known scholars in the area of state and local public finance of actual practices and analysis of potential policy changes for the future.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 7: Can Georgia Move from Income Tax to Consumption Tax?

Sally Wallace


Sally Wallace INTRODUCTION Since 1985, there have been numerous calls for flat taxes in the US and abroad. These calls have led to substantial rethinking of income taxes for the first time in many years. Flat tax reforms often call for an income tax system that limits deductions, exemptions and credits, and imposes one statutory tax rate. In some countries, flat tax reforms have integrated the corporate and individual income taxes. Flat tax reforms have simplified the structure of the income tax in countries such as Jamaica, Estonia, Russia and Lithuania. While the flat rate income tax reforms of Jamaica, Estonia, Russia and other countries have their merits, they are aimed at simplifying the tax system through elimination of various exemptions and deductions, and by simplifying the tax rate structure. They do not fundamentally change the base of taxation. There is, however, another type of income tax reform (which, unluckily, is also referred to as flat tax reform) that stems from a long-standing debate over the merits of a general consumption tax versus a broad-based income tax. This kind of reform fundamentally changes the base of taxation from realized income (wages, realized capital gains, interest income and the like) to consumption. It may be accomplished using a reporting mechanism that is similar to an income tax, but one which exempts savings from taxation. In the United States, there have been numerous consumption tax proposals at the federal government level. Hall and Rabushka (1983, 1995) proposed a direct consumption tax for...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.