Tax Review: Is Heavy Taxation of Capital Socially Desirable?
Volume XXXIX No. 10
“The most important long-run structural problem with the U.S. economy is that we undersave,” writes economist Michael J. Boskin in this essay. Professor Boskin maintains that current U.S. tax policy is preventing the nation from accumulating enough capital and that the current saving rate is grossly inadequate. Professor Boskin argues that our lack of saving “is a fundamental, pervasive problem, which involves an enormous waste of resources.” The best solution, he maintains, involves “a major changes in our tax system: replacing taxes on income with taxes on spending; i.e., removing saving from the tax base.”