Consumption taxes are the most efficient way to address America’s fiscal challenges because they don’t discourage productive activities like working, investing, and research that enhance future economic productivity. While politicians typically target high-income earners for tax increases rather than the middle class, this approach requires higher marginal tax rates that create disincentive effects on economic activity, with broadening the tax base while lowering rates being more economically efficient. Congress is unlikely to raise sufficient tax revenue given voters’ resistance to higher taxes, making continued large deficits probable and inflation the most likely outcome, functioning as a hidden tax that will ultimately pay for America’s deficits.
Learn more about the launch of the Hoover Institution’s Fiscal Policy Initiative.
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Featuring:
- Valerie Ramey, Hoover Institution
- Joshua Rauh, Hoover Institution
- Kyle Pomerleau, American Enterprise Institute
- Rebecca Lester, Stanford University
