Premium
The Design of Capital Income Taxation: Reflections on the Mirrlees Review *
Author(s) -
Keuschnigg Christian
Publication year - 2011
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2011.00145.x
Subject(s) - economics , tax reform , public economics , flat tax , indirect tax , double taxation , state income tax , allowance (engineering) , value added tax , international taxation , equity (law) , macroeconomics , gross income , law , operations management , political science
Abstract This commentary reflects on the recommendations of the Mirrlees Review on tax reform, with a special focus on capital income taxation. Regarding the alternatives of moving to a consumption‐based tax system, the commentary discusses the relative merits of choosing an ACE system (allowance for corporate equity) rather than a cash‐flow tax at the company level. It reviews the arguments in favour of full elimination of tax on the normal return to savings at the personal level, which contrasts with alternative tax reform proposals recommending a positive but low and flat tax rate on personal capital income. The paper also discusses how existing computational models should be extended for a meaningful quantification of the gains and costs of implementing a tax reform along the lines of the Mirrlees Review proposals.