Peculiar institutions: A British perspective on tax policy in the United States

<p>By both effect and example, tax policy in the United States has a huge impact on the rest of the world. This paper explores five features of the American tax system that seem, from a British and European perspective, to be both especially peculiar and potentially instructive. These are: the remarkably low overall level of taxation; the absence of a value added tax (or any other general national tax on consumption); the absence of any explicit interstate equalisation; the marginal subsidisation of low earnings under the Earned Income Tax Credit; and the fragmentation of power in policymaking, an important aspect of which is the role played by the Constitution.</p>