By Chet Yarbrough
Rebellion, Rascals, and Revenue: Tax Follies and Wisdom Through the Ages
By: Michael Keen, Joel Slemrod
Narrated by: Walter Dixon
“Rebellion, Rascals, and Revenue” is a painful and laborious book to listen to, in part, because of its length but mostly because of its subject. Few citizens appreciate having their hard-earned wealth and income reduced by government taxation. However, the co-authors are well qualified and informative in explaining how important taxes are to every form of government to insure citizen’s peace, welfare, and protection. More importantly, they show how countries of the world have both aided and diminished prosperity of nation-state’ economies with good and bad tax policies.
Kevin McCarthy (Speaker of the House.)
As noted by McCarthy, the deficit exceeds the annual gross national product of the United States.
Keen’s and Slemrod’s book is timely. The wide gap between America’s two major political parties is partly because of America’s deficit, which has not been higher since WWII. The solution lies in the political will to increase taxes and reduce government expenditure. The difficulty is finding an equitable balance between tax revenues and the health, education, and welfare of America’s citizens.
Keen’s and Slemrod’s book illustrate the folly of many nations that have inexpertly balanced tax policy with the health, education, and welfare of their citizens. From before the French revolution to modern times, the authors recount errors made by governments that bumble their way from forcing tax collection to passing confiscatory laws that support bureaucracies that beggar rather than serve the public. Along the way, the authors show how tax collection is conducted, how some improvements were made, and how citizens were both benefited and harmed by tax policies.
After wading through the author’s history of nation-state’ tax hijinks, Keen and Slemrod conclude America’s tax system should be overhauled. Their solution is a value added tax. This is an interesting conclusion that is reinforced by T. R. Reid’s book, “A Fine Mess” which suggests the same thing. However, Reid is a reporter for the “Washington Post”, not an economist with experience like Keen’s and Slemrod’s.
A value-added tax (VAT) is a consumption tax on goods and services that is levied at each stage of the supply chain where value is added, from initial production to the point of sale. The amount of VAT the user pays is based on the cost of the product minus any costs of materials in the product that have already been taxed at a previous stage1.
Keen and Slemrod do not clearly explain why they think a VAT is the solution to a better tax system than America’s current policy. Reid explains a VAT is a broad-based low-rate tax that will reduce the need for a tax collection bureaucracy because it eliminates corporate loopholes, broadens, and reduces tax rates, and equalizes citizens’ tax burden. Reid believes more revenue would be produced to reduce America’s debt. It would also reduce the expense of America’s tax collection bureaucracy. In theory both government expense and the deficit would be aided by a VAT tax policy.