ABSTRACT
This chapter considers the economic effects of different kinds of taxes and of various rules of taxation. It analyzes the effection private savings of changes in social security benefits, and of a proposal to replace income tax with a tax on consumption. The value of all the property owned by an individual at his death is potentially subject to an estate tax imposed by the federal government and to an inheritance tax imposed by the state in which he resides. Individuals who file a federal income tax return in the United States can reduce the amount of their income that is subject to tax by choosing one of two alternatives: they may take a “standard deduction” of a specified amount, or they can “itemize” their deductions, subtracting from taxable income the sum of their expenditures on certain items such as State income tax, mortgage interest, property tax, and charitable contributions.
