The authors observe that consumption taxation is superior to income taxation because it does not penalize saving and investment and propose that the U.S. income tax system be completely replaced by a progressive consumption tax. They argue that the X tax, developed by the late David Bradford, offers the best form of progressive consumption taxation for the United States and outline concrete proposals for the X tax's treatment of numerous specific economic issues.

LIST OF ILLUSTRATIONSACKNOWLEDGMENTSINTRODUCTION1. WHY TAX CONSUMPTION?Removing the Income Tax Penalty on SavingGains from ReformConsumption-Tax Features in the Current Income Tax SystemConclusionBox: The Trade-off Fallacy2. THE CASE FOR THE X TAXThe Retail Sales Tax and the Value-Added TaxThe Two-Part VATThe X Tax: A Progressive Two-Part VATComparing the X Tax to the Personal Expenditures TaxConclusionBox: Optics of the X Tax and the PET3. MAINTAINING PROGRESSIVITYTax Rate ScheduleAssessing the Distributional Effects of the X TaxConclusionBox: Zero Revenue from Taxation of Risky Returns4. FRINGE BENEFITS AND TRANSFER PAYMENTSFringe BenefitsFinancing Social Security and MedicarePublic and Private Transfer PaymentsConclusionBox: Taxation of Gambling5. BUSINESS FIRMSGeneral IssuesDistinguishing Wages from Business Cash FlowFirms with Negative Business Cash FlowsConclusion6. FINANCIAL SERVICESNeutral Tax TreatmentThe Problem of Mislabeled TransactionsThe Search for a SolutionThe R+F Cash-Flow MethodAccounting MethodsSpecial CasesConclusion7. INTERNATIONAL TRANSACTIONSThe Border Adjustment QuestionThe ¿Competitiveness¿ IllusionGiving Wealth Away without Really TryingAbove-Normal Returns and Transfer PricingOther Cross-Border IssuesConclusionBox: Border Adjustment with Fixed Exchange Rates8. THE TRANSITIONTransition Burden on Existing CapitalNormative IssuesOutline of a Transition PolicyMacroeconomic Policy during the TransitionConclusion9. THE NONBUSINESS SECTOROwner-Occupied Housing and Consumer DurablesProduction by Governments, Nonprofits, and HouseholdsPatrolling the Boundaries of the Business Cash-Flow TaxFiscal Federalism under the X TaxConclusionBox: Taxation of Home Resales10. THE VAT ALTERNATIVESubtraction and Credit-Invoice VATsThe Superiority of the VAT to the Retail Sales TaxRecent Discussion of VATUsing the VAT to Replace Other TaxesThe ¿Easy¿ StuffMonetary Policy and Other Transition IssuesGovernments and NonprofitsImplications for Social SecurityCombating the ¿Money Machine¿ConclusionCONCLUSIONNOTESREFERENCESINDEXABOUT THE AUTHORS