Proponents of a consumption tax system to replace the federal income tax typically couch their support for radical tax reform in the language of traditional tax policy goals. They claim that their reform plans promote the goals of simplicity, economic efficiency, stability, and equity. This Article examines how well the proposed tax reforms will achieve those goals in the context of their anticipated impact on state and local finance. The effects on state and local governments of a flattened-rate income tax, flat tax, or a broad federal consumption tax could be enormous and devastating. The Article finds that all of the reform proposals fall far short of achieving the traditional goals of tax policy in the context of state and local finance. This Article develops an alternative explanation for why the radical tax proposals are currently under serious consideration. It suggests that the adverse impact that the federal-level reforms will have on state and local finance is not an incidental side effect, but rather is part of a strategy consistent with conservative thinking to reduce the size of government and to make taxation more difficult. The alternative explanation views the tax proposals as a way to advance the conservative political agenda on at least two fronts: (1) to remove tax expenditures as a policy tool and thereby reduce the opportunities for "social engineering" by the central government; and (2) to force a realignment of federalism issues in the taxation area by making the total tax burden more transparent and making local taxation more difficult.
56 Rutg. L. Rev. 409 (2004)