consumed-income tax

Consumed-Income Tax

A tax only on income that one spends on goods and services. A common example of a consumed-income tax is a sales tax. Most countries have consumed-income taxes at some level and proposals exist in the United States to shift from a mainly progressive tax system to a system that utilizes consumed income taxes predominantly or exclusively. Proponents of a consumed-income tax argue that it encourages saving and makes the economy more efficient, while opponents maintain that it adversely affects the poor, who must by necessity spend more of their income.
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consumed-income tax

A tax levied only against the part of income that is spent. Proponents of this type of taxation contend that exempting the portion of income that is saved will encourage savings, provide funds for investment, and make the economy more productive.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
For those fundamental tax reform proposals involving shifting to a consumption tax, one or more of the following four major types of broad-based consumption taxes are included in these congressional tax proposals: the value-added tax (VAT), the retail sales tax, the consumed-income tax, and the flat tax based on a proposal formulated by Robert E.
Types of Broad-Based Consumption Taxes Value-Added Tax Retail Sales Tax Consumed-Income Tax Flat Tax (Hall/Rabushka Concept) International Comparisons Other Types of Fundamental Tax Reform Income Tax Reform: Base Broadening Option of the Current or an Alternative Income Tax System Legislative Proposals for Fundamental Tax Reform Representative David Dreier's Proposal Representative John Linder's Proposal Senator Saxby Chambliss's Proposal Tax Reform to Eliminate the AMT Reform of the Corporate Income Tax Introduction
In prior Congresses, four major types of broad-based consumption taxes have been included in congressional tax proposals: the value-added tax (VAT), the retail sales tax, the consumed-income tax, and the flat tax based on a proposal formulated by Robert E.
Current tax reform proposals aim to replace the personal and corporate income taxes with an integrated consumed-income tax, which looks like a regular income tax but contains special provisions to eliminate the bias against saving and investment.
The movement toward a consumed-income tax eventually may meet these criteria, or tax reform may go in another direction entirely.
Rather, under a cash-flow or consumed-income tax system, we would measure the amount of cash that the taxpayer received.
Opponents also argue that a cash-flow or consumed-income tax would present formidable transition problems.
Senators Nunn and Domenici are preparing to introduce in Congress a proposal for an alternative tax system that would be a form of consumption-based cash-flow or consumed-income tax. They announced the broad outlines of their proposal on October 5.
Another thorny question involves the treatment of gifts and bequests under a consumed-income tax system.
Deputy Office of Management and Budget Director Alice Rivlin, a wellknown advocate of moving to a consumed-income tax system, has said that the idea "very definitely should be explored."