Chris William Sanchirico (Penn) has posted A Critical Look at the Economic Argument for Taxing Only Labor Income on SSRN. Here is the abstract:
According to accepted wisdom, "the tax substitution argument" fairly establishes that it is best to tax only labor income, and not also income from savings and investment. In this Article, I show that the tax substitution argument – which is actually a disjointed collection of arguments – is variously incomplete, incorrect, and conclusory.
