Victor Thuronyi (International Monetary Fund) presents Supplemental Expenditure Tax at NYU today as part of its Pathways to Tax Reform Series:

The U.S. urgently needs tax reform and substantial deficit reduction. The Supplemental Expenditure Tax (SET) can be an important building block of a tax reform package that reduces the deficit. The SET should have appeal to Democrats because it is a fair tax on upper-income individuals. It should appeal to Republicans because it is business- and investment-friendly. It should be attractive to anyone interested in a simpler and less distortionary tax system which will act as less of a drag on the economy and hence facilitate sustained economic recovery. Sure, there will be aspects of the SET that some people will not like, as there are with any tax. But in an environment where some tough choices need to be made, the downsides of the SET are far outweighed by the advantages. Because the SET is an additional tax, it will involve additional complexity and compliance burden. This is one of the major downsides of the SET. On the other hand, the SET will enable the AMT to be eliminated and will facilitate simplifications to the income tax. On balance, a package should be able to be designed that is substantially simpler than current law. 

Commentators:

• David Miller (Partner, Cadwalader, Wickersham & Taft, New York)
• Daniel Shaviro (Wayne Perry Professor of Taxation, NYU)

Update:  Dan Shaviro blogs the workshop here.