Introduction

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book provides some background information on the Canadian tax system. It identifies the special provisions incorporated in the personal income tax system and presents a classification of taxes according to the uses of the revenue they raise. The book explores the major conceptual issues associated with the different tax bases: in particular, it shows that the major difference between the income and consumption bases is the tax treatment of capital income, including the receipt of windfall gains. It discusses some of the issues related to the transition to a flat tax regime and the potential for simplification of the tax system. The book reviews the contributions by Simons, the Carter Commission and the tax reform proposals prepared by the US Treasury in 1984, and identifies the main rationale underlying the choice of comprehensive income as a tax base.