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Fair Not Flat: How to Make the Tax System Better and Simpler [Paperback]

by Edward J. McCaffery
4.4 out of 5 stars  See all reviews (18 customer reviews)

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Book Description

December 31, 2006 0226555615 978-0226555614
Everyone knows that the current tax system is unfair. Some of the richest people in America pay no tax, while a huge share of the tax burden falls on the rest of us. A mere glance at the tax code confirms that it is far too complex, with volumes of rules that no ordinary person could possibly comprehend. What is to be done? Some conservatives have called for a so-called flat tax. But a flat tax is not necessarily a simple tax, and "flat" means "more" for most taxpayers: a rise in middle-class taxes to finance tax cuts for the rich. Is there another choice?
In clear, easy-to-understand language, Edward J. McCaffery proposes a straightforward and fair alternative. A "fair not flat" tax that is consistent and progressive would tax spending, not income and savings. And if it were collected at its lower levels through a national sales tax, most people would not have to file a return. A supplemental tax on spending for the wealthiest individuals would make the national sales tax progressive. Under McCaffery's system, a family of four would pay no tax on their first $20,000 in spending, and 15 percent on the next $60,000. Only the few families who spend more than $80,000 a year would be subject to the supplemental tax. Necessities would be taxed less than ordinary and luxury items. No one would be taxed directly on savings. The estate and gift or so-called death tax would be abolished, for the simple reason that dead people don't spend. The "fair not flat" tax would fall on heirs when and as they spend their good fortune. Perhaps best of all, most Americans would not have to fill out tax returns.

Simpler, more efficient, fairer, and more reflective of America's current social values, McCaffery's "fair not flat" tax could help get us out of the tax mess that politicians and special interests have gotten us into, improving the whole country in the process. Read Fair Not Flat to find out how.

“In Fair Not Flat, Mr. McCaffery lays out the case for a consumption tax. He does so in a reader-friendly way, presenting his argument with very few footnotes, equations or technical terms. The consumption of the book, so to speak, is not at all taxing. And its argument is well worth pondering.”—Bruce Bartlett, Wall Street Journal

Editorial Reviews

From Library Journal

Tax-law expert McCaffery is a professor of law at the University of Southern California (USC) and director of the USC-Caltech Center for the Study of Law and Politics. In this articulate follow-up to Taxing Women, he provides an accessible and effective analysis of the present federal income tax and estate- and gift-tax systems and proposes an innovative approach that would replace both with a consistent progressive consumption tax. The author asserts that this proposal could simplify the system, reduce the negative impact of politicians and special interest groups, and make taxation fairer in general. This simple book covers a wide array of topics, ranging from the history of the U.S. tax system to the problems associated with previous tax reform initiatives, including the Tax Reform Act of 1986 and present discussions regarding implementation of a flat tax. A glossary, a list of further readings, and examples drawn from recent popular works (e.g., Robert T. Kiyosaki's Rich Dad, Poor Dad) enhance the text. Provocative and persuasively argued, this book is recommended for both academic and public libraries. Norm Hutcherson, California State Univ., Bakersfield
Copyright 2002 Cahners Business Information, Inc. --This text refers to the Hardcover edition.


"Ed McCaffery is brilliant. He is very knowledgeable about our tax code and he speaks English. His new book takes on the flat-tax advocates by showing that our system can be both fair and simple." - Pat Schroeder; "Ed McCaffery pumps more logic into this one book than most do in a lifetime of writing. If you want to correct the foibles of our present tax system, Fair Not Flat is the one essential book you must read." - Bob Packwood --This text refers to the Hardcover edition.

Product Details

  • Paperback: 192 pages
  • Publisher: University Of Chicago Press (December 31, 2006)
  • Language: English
  • ISBN-10: 0226555615
  • ISBN-13: 978-0226555614
  • Product Dimensions: 9 x 6.3 x 0.5 inches
  • Shipping Weight: 9.6 ounces (View shipping rates and policies)
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (18 customer reviews)
  • Amazon Best Sellers Rank: #2,040,514 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews
10 of 11 people found the following review helpful
4.0 out of 5 stars A widely misunderstood idea September 27, 2008
Economists know that income taxes are by nature distorting taxes- that is, they strongly affect our behavior. To try and correct for these distortions, we have enacted thousands of pages of of laws providing for 401Ks, IRAs, tax credits, investment credits and hundreds of other exceptions. And yet, there's a much simpler solution.

Consumption taxes are the ideal non-distorting tax. They don't punish investment, or tax inflation, or force people to spend millions every year on tax compliance (and tax avoidance). They're remarkably simply to collect, and people can't escape them by keeping their money offshore. A uniform Federal consumption tax could eliminate debates about Internet sales taxes. So why do politicians fight them?

One reason is that, despite constant speeches about reforming the tax code, politicians like a complicated tax code. It lets them grant favors, buy votes, and rail about making "the rich pay their fair share" even though the very wealthy (including many politicians) have ways of escaping the high marginal tax rates they put into law.

At its simplest, a consumption tax is simply a universal sales tax that exempts those goods that are a disproportionate part of the consumption of the lowest income groups- food, clothing, rent, and so forth. Everything else gets taxed at a single rate. By nature it's progressive- the wealthier you are, the less you spend on exempt items. It encourages investment- soemthing that benefits everyone.

Not convinced? Read this book.
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15 of 18 people found the following review helpful
McCaffrey's on the right track. Consumption taxes are much better for everyone, from many different perspectives. He does a good job of tracking the history of taxation in the United States; most people don't realize that we haven't had an income tax very long, and our forefathers didn't want an income tax. In fact, it took a constitutional amendment in 1913 to even permit an income tax. However, McCaffery's plan is still too complicated, and prone to wreaking havoc on specific sectors of the economy. The FairTax, as outlined in Rep. John Linder's "The FairTax Book," is superior to and simpler than McCaffery's "Fair not Flat" tax, and maintains progressivity that completely untaxes the poor. And FairTax is much closer to reality, since it's an actual bill in Congress right now (HR 25 and S 25), and it has over 50 co-sponsoring Representatives and Senators. McCaffery should use his talents in the tax policy arena to help support FairTax, which already has a nationwide grassroots network over 700,000 strong. Thanks to McCaffery for bringing more attention to the importance of taxing consumption and not income!
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6 of 6 people found the following review helpful
3.0 out of 5 stars Clearly written but an unsatisfactory argument June 15, 2010
The book presented tax issues in a refreshingly clear and compelling way, but without being patronising. The problems with the current broad-based approach to taxation were laid bare. The answer, for McCaffery is a consumption tax base. Confusingly, however, in the final analysis he would use income calculations in order to determine consumption - thus ignoring one of the main advantages with consumption taxes. Indeed, the practicalities of collecting his tax seem to arise for high spenders; how will the authorities know who are the big spenders unless everyone has to provide their income details and how will the authorities collect the surtax off them? Presumably this would be done through an income tax, which again moves away from the advantages of consumption taxes.

It is easy to make a case against the current system; it is very problematic on a number of grounds because it is not use a true income base. However, McCaffery never compares his proposal with a more comprehensive income approach. This is perhaps forgiveable given that his aim is to show that his proposal is better than the status quo. But if this is his aim, he also needs to show that the Fair Not Flat Tax is also better than rival proposals.

We can draw out McCaffery's dismissal of a true income tax. He seems to think that there is no need to tax people's receipt of wealth, as long as they keep it invested. The idea here is that the person does not benefit from the wealth until they spend it. However, this is patently false. If Jon obtains a fortune and invest it while Ed does not, then Jon can earn additional income over time while Ed does not. Jon and Ed may spend the same amount of money, and therefore pay the same tax, but Ed has to work very hard all his life while Jon lives a life of leisure.
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9 of 11 people found the following review helpful
5.0 out of 5 stars Insightful and interesting look at the tax system April 22, 2002
By A Customer
This book was recommended to me by a friend who loved the book's honesty and insight. This book discusses advanced and interesting ideas which used to be off-limits to all but lawyers and accountants. Mr. McCaffery is engaging and easy to understand. Every taxpayer in America should read this book--It will give you new insights and will demistify the complicated world of tax law.
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6 of 9 people found the following review helpful
This book is exceptionally well written. It is clear and easy to understand, with examples based in current literature. An important read for anyone who pays taxes.
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4 of 7 people found the following review helpful
5.0 out of 5 stars A must read for Tax Techies May 29, 2002
By Adam
Any [one] can see that the transaction costs of the current income tax system combined with its accompanying incentive to waste make it unworkable from a wealth maximizing perspective. Anyone who understands the current tax system, even a left-wing, ivy league educated law professor has to admit that a consumption tax, coupled with the elimination of the estate tax would better equip America to reduce transaction costs and incentivize saving. "The Mac" lays it all out for the world to see ... are they looking?
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Most Recent Customer Reviews
4.0 out of 5 stars Good concept, but I was bothered
One thing about this book is that it was written so that anyone could understand taxes. I have to give kudos to Mccaffery for his simple, yet, informative style of writing. Read more
Published on May 11, 2009 by lawguy20
4.0 out of 5 stars It's Your Money - You Earned It!
Look at your paycheck...not the take-home pay line, but the gross pay line. It's a lot more isn't it? Wouldn't you like to take home your WHOLE check? Read more
Published on October 19, 2008 by Ryan Campbell
5.0 out of 5 stars An interesting argument
Should we have a flat tax instead of the present income tax? How about, as the author of this book proposes, a "fair" tax. Edward McCaffery's idea is to tax spending. Read more
Published on November 22, 2007 by Jill Malter
3.0 out of 5 stars Out of Date but almost right, well half right.
Just get "The Fair Tax Book" or the new paperback update. It explains it better and describes real legislation before the congress right now. Read more
Published on April 16, 2006 by Byron
5.0 out of 5 stars A remarkable learning experience
If you want to learn about taxation this is the book. A clear expose of a tax system that is way out of control and how to fix it. Thank you Mr. Read more
Published on December 24, 2005 by Frank V. Dzwonkowski
4.0 out of 5 stars I was skeptical but he convinced me.
Normally I pass by the business books on my way to the science books but this one caught my eye. I was skeptical but he convinced me. Read more
Published on October 26, 2003 by Jon Claerbout
5.0 out of 5 stars OUTSTANDING!
Mr. McCaffery's analysis is superb. This is a must-read for anyone who either thinks their income tax is too high or that the tax system is in desperate need of a major change... Read more
Published on January 14, 2003 by Richard deSaulles
5.0 out of 5 stars Good Advice for China
Edward McCaffery presents a clear and rational argument in this book, which is the most for which one can hope from a liberal law professor. Read more
Published on May 3, 2002 by William Therien
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