ABSTRACT
This chapter compares several tax reform proposals in terms of a variety of factors which affect the degree of simplicity for taxpayers and tax collectors and the costs of administration and compliance. The consumption-base flat tax tries to stimulate efficiency by eliminating the taxation of capital income at the personal level, reducing the overall tax burden on high income taxpayers and shifting the tax burden onto labour income and onto low and/or middle income workers. The comprehensive income base eliminates the ineffective tax preferences for retirement savings, keeps the tax treatment of non-sheltered savings roughly unchanged or reduces it marginally and lowers substantially the tax rates on labour income for all workers. Flat taxes, whether with an income or a consumption base, are tied inextricably to an equity-efficiency trade-off as they try to acquire some efficiency gains at the cost of greater inequality in the distribution of income.
