Competitive Consumption Tax
Channel: Economy In Crisis
Date: 2014-04-07

CPA held a staff briefing in the Senate Dirksen Building on a competitive consumption tax this afternoon.  Senator Ben Cardin (D-MD) discussed his upcoming proposal of a "progressive consumption tax" for trade competitiveness and tax fairness. Professor Michael Graetz showed how to drastically reduce income taxes with a consumption tax in a revenue neutral and distribution (progressivity) neutral way.  Joe Gagnon of the Peterson Institute showed why currency would not adjust to negate the trade competitiveness benefits.  I also presented discussion on offsetting payroll taxes, rather than income taxes, with a consumption tax.

For CPA, we are looking at how to neutralize the two way trade disadvantage we face because other countries subsidize exports and tariff imports with border adjustable consumption taxes.  Since it is WTO illegal to countervail this unfair situation, we are looking at reducing non-border adjustable taxes (income) and increasing border adjustable taxes (consumption) so we can rebate taxes on exports and tax imports as well.  Any transition would need to be trade competitive, revenue neutral and distribution neutral for CPA to endorse it.