The USA Tax

The USA Tax

A Progressive Consumption Tax

By Laurence Seidman





Although proposals for "flat" taxes have received a good deal of attention, a majority of Americans say that, for reasons of fairness, they favor a progressive tax. The USA Tax: A Progressive Consumption Tax presents an alternative to both the present tax system and a flat tax. The USA (unlimited savings allowance) tax is a progressive consumption tax that differs fundamentally from our current tax structure in that it taxes consumption rather than income. In April 1995, the USA tax bill was introduced into the United States Senate. Whatever the fate of the bill, this book is an important contribution to the literature on the theory and design of a progressive consumption tax. The USA tax has two components—the household tax, which replaces the current household income tax, and the business tax, which replaces the corporate income tax. A fundamental purpose of the USA tax is to raise the level of national saving and investment. It accomplishes this by making all household saving and business investment in capital goods tax-deductible. Seidman describes the ideals on which the USA tax is founded: the household component is based on the progressive personal consumption tax, and the business component is based on the consumption-type value-added tax (VAT). He then shows how the version of the USA household tax presented in the 1995 bill differs in critical aspects from the ideal of a personal consumption tax, and how it can be improved by amendments. Seidman devotes most of his book to the impact on saving, the issue of fairness, practical design options, simplification, and a variety of questions and criticisms. The book, written in straightforward language, will help guide the non-economist through the coming debates on the USA tax.


Out of Print ISBN: 9780262193832 170 pp. | 8.1 in x 9 in


$20.00 X ISBN: 9780262514538 170 pp. | 8.1 in x 9 in


  • ...the author presents a useful introduction to a logical alternative to our existing income tax.

    Boston Sunday Globe


  • The progressive consumption tax is one of the most important ideas in tax policy in a very long time. Larry Seidman's book is an excellent exposition. Whether you are sympathetic or not, it deserves your serious consideration.

    Lawrence Summers

    former Nathaniel Ropes Professor of Political Economy, Harvard University

  • The USA Tax is written clearly, on a topic on considerable current interest in tax policy. Seidman discusses the relevant issues, and makes a coherent case for the USA tax system, the only current proposal that would incorporate a progressive, individual expenditure tax. I find Seidman's analysis of the current savings problem, and particularly the channels through which a consumption tax would increase saving, to be on target. A readable and informative book.

    Alan J. Auerbach

    Robert D. Burch Professor of Tax Policy and Public Finance, University of California

  • This is an excellent analysis of an approach to fundamental tax reform that has considerably more political appeal than the flat tax.

    Rudolph G. Penner

    Managing Director, Barents Group, a KPMG Company