Princeton economist David F. Bradford has written a book that lives up to the promise of its title, and he has done so in a style easily comprehensible to the educated laymen. His book serves three purposes. It is a primer on the economics of taxation; it analyzes the current federal income tax system, and it advances several alternative proposals for reforming the system.
Bradford begins with a short course on the principles of taxation. This material is familiar to professional economists, but much of it will be new to laymen and public officials. For instance, a consumption tax can be made as progressive as an income tax. Progressivity does not require graduated tax rates. Who bears the burden of a tax has little to do with who nominally makes payment to the government. In particular, business does not bear the burden of taxation, so talk of shifting the tax burden from individuals to business, or vice versa, is meaningless.
Bradford contrasts a pure income tax with a pure consumption tax. Income is either consumed or saved. A true income tax is one which is levied at the time when income accrues (not, as is now the case with our capital gains tax, at the time when income is realized). A consumption tax is one which is levied at the time when income is spent; it exempts income which is saved. The current "income" tax system is a hybrid of these two.