Fed's Chief Gives Consumption Tax Cautious Backing - Mercedes-Benz Forum

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post #1 of 2 (permalink) Old 03-03-2005, 08:52 PM Thread Starter
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Fed's Chief Gives Consumption Tax Cautious Backing

WASHINGTON, March 3 - Alan Greenspan, the Federal Reserve chairman, cautiously endorsed a shift in the nation's tax system on Thursday from one that primarily taxes what people earn to one that taxes what they spend.

Testifying before a presidential advisory panel on overhauling the tax code, Mr. Greenspan steered away from sweeping plans to replace the income tax with a national sales tax.

But he supported what many of President Bush's advisers see as a backdoor version of a consumption tax: expanding the role of tax-free savings accounts so that people could shield their income from taxes until they actually spend it.

"Many economists believe that a consumption tax would be best from the perspective of promoting economic growth - particularly if one were designing a system from scratch - because a consumption tax is likely to favor saving and capital formation," Mr. Greenspan said.

But the Fed chairman warned that shifting to a new system would raise difficult "transition issues," and he cautioned against "going for purity" in any kind of tax overhaul.

Complete article at http://www.nytimes.com/2005/03/04/politics/04tax.html

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post #2 of 2 (permalink) Old 03-04-2005, 05:53 AM
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I sometimes wonder about Greenspan

Is the man cautious when he needs to go to the bathroom too?

A consumption tax, or any other VAT in disguise, would be a regressive taxation system, the poor will hate it, the rich will like it (especially if it replaces some measure of income tax.)

Death and Taxes...

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