Bring the States Along
Bring the States Along
This chapter argues that in the U.S. federalist system, in which many traditional government functions are carried out not by the government in Washington but by states and localities, any durable reform of the federal system should take into account its effects on the tax collections and budgets of states. It presents the Competitive Tax Plan for the U.S. federal system. The chapter admits that the plan has certain drawbacks for the states, in that it will pressure them to eliminate their income taxes for families making less than $100,000; however, it also has a number of possible benefits for states, especially if they were to adopt similar consumption taxes themselves. The chapter also discusses the consequences of fundamental reforms for the states.
Keywords: U.S. federalist system, tax collections, tax plan, income tax, fundamental reforms
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