Greenspan Touts Idea of a Consumption Tax

[conjur]

http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

 

[DragonMasterAlex]

Originally posted by: conjur
http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

 

[StageLeft]

How about Bush stop running up the deficit?

 

[conjur]

Originally posted by: DragonMasterAlex
I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

Sure, Greenspan is very intelligent in matters of national economics and finance but that doesn't mean he's always right. He and O'Neill were concerned about the tax cuts not being tied to triggers but they didn't stick to their opinions as hard as they should have. I think Greenspan's being forced to consider a myriad of options in the wake of the massive run-up of debt and the lopsided "recovery".

 

[ECUHITMAN]

Originally posted by: DragonMasterAlex

Originally posted by: conjur
http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

Bravo on giving us the party line from www.fairtax.org. The problem with this line of thought is it would require the super wealthy to continue buying things at the rate they do now. Can you be sure this would happen? Also under the proposed "fair tax" corporations WOULD NOT PAY any tax. NONE.

On its face it looks like a good idea. But what happens if people do not buy as much stuff this year as they did last year (and when I am saying people, I am talking about Bill Gates types buying another private jet (which if it was used he would not pay ANY tax on). How can a country run on a fluid tax base? One year we have 2 Trillion in tax revenue the next we have 1.8 trillion, the year after that we have 2.5 Trillion. How do you budget?
Everyone (including the super rich) would get a rebate that is supposed to cover you for buying up to the poverty level but it is given to you monthly. So poor people would have to pay the same tax as the super rich on whatever they buy. Can you be sure people could afford this? Do you want people waiting to get their monthly check to buy food?

I encourage you to look over the plan and really think about what they are saying. Oh yeah, the Republicans laugh at the EU with their socialized medicine that is funded by a tax like this. But now they want to run a country on the same type of tax money? Interesting.

 

[KevinH]

Originally posted by: ECUHITMAN

Originally posted by: DragonMasterAlex

Originally posted by: conjur
http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

Bravo on giving us the party line from www.fairtax.org. The problem with this line of thought is it would require the super wealthy to continue buying things at the rate they do now. Can you be sure this would happen? Also under the proposed "fair tax" corporations WOULD NOT PAY any tax. NONE.

On its face it looks like a good idea. But what happens if people do not buy as much stuff this year as they did last year (and when I am saying people, I am talking about Bill Gates types buying another private jet (which if it was used he would not pay ANY tax on). How can a country run on a fluid tax base? One year we have 2 Trillion in tax revenue the next we have 1.8 trillion, the year after that we have 2.5 Trillion. How do you budget?
Everyone (including the super rich) would get a rebate that is supposed to cover you for buying up to the poverty level but it is given to you monthly. So poor people would have to pay the same tax as the super rich on whatever they buy. Can you be sure people could afford this? Do you want people waiting to get their monthly check to buy food?

I encourage you to look over the plan and really think about what they are saying. Oh yeah, the Republicans laugh at the EU with their socialized medicine that is funded by a tax like this. But now they want to run a country on the same type of tax money? Interesting.

Exactly. The consumption tax sounds great and all but it assumes that people's spending habits will remain consistent which it won't.

 

[lozina]

Originally posted by: ECUHITMAN

Originally posted by: DragonMasterAlex

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

Jason

Bravo on giving us the party line from www.fairtax.org.

LOL Plagiarist!

 

[Kipper]

Originally posted by: DragonMasterAlex

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

Consumption and income do not share a linear relationship. If anything, it seems that as income increases at obscene rates consumption tapers off a bit - it is still high, but it does not comprise as large a quantity of living expenses as people in the middle/working class. A flat consumption tax would only work if the relationship was linear.

 

[dmcowen674]

Originally posted by: conjur

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy.

Why not rollback Bush's ill-advised tax cuts from the last few years?

If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession.

Then again, if the economy is booming, why is Greenspan looking to spur further economic growth?
Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

Shhhhhhh , you'll confuse the sheep with logic.

 

[DragonMasterAlex]

Originally posted by: ECUHITMAN

Originally posted by: DragonMasterAlex

Originally posted by: conjur
http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

Bravo on giving us the party line from www.fairtax.org. The problem with this line of thought is it would require the super wealthy to continue buying things at the rate they do now. Can you be sure this would happen? Also under the proposed "fair tax" corporations WOULD NOT PAY any tax. NONE.

On its face it looks like a good idea. But what happens if people do not buy as much stuff this year as they did last year (and when I am saying people, I am talking about Bill Gates types buying another private jet (which if it was used he would not pay ANY tax on). How can a country run on a fluid tax base? One year we have 2 Trillion in tax revenue the next we have 1.8 trillion, the year after that we have 2.5 Trillion. How do you budget?
Everyone (including the super rich) would get a rebate that is supposed to cover you for buying up to the poverty level but it is given to you monthly. So poor people would have to pay the same tax as the super rich on whatever they buy. Can you be sure people could afford this? Do you want people waiting to get their monthly check to buy food?

I encourage you to look over the plan and really think about what they are saying. Oh yeah, the Republicans laugh at the EU with their socialized medicine that is funded by a tax like this. But now they want to run a country on the same type of tax money? Interesting.

What's funny is that I've never even *been* to the fairtax.org website

Jason

 

[DragonMasterAlex]

Originally posted by: Skoorb
How about Bush stop running up the deficit?

that would be a nice plus, too. We seem to be unable to find elected officials who *don't* want to spend every dime we give them and then spend some more.

Jason

 

[DragonMasterAlex]

Originally posted by: conjur

Originally posted by: DragonMasterAlex
I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

Sure, Greenspan is very intelligent in matters of national economics and finance but that doesn't mean he's always right. He and O'Neill were concerned about the tax cuts not being tied to triggers but they didn't stick to their opinions as hard as they should have. I think Greenspan's being forced to consider a myriad of options in the wake of the massive run-up of debt and the lopsided "recovery".

probably true.

 

[DragonMasterAlex]

Originally posted by: ECUHITMAN

Originally posted by: DragonMasterAlex

Originally posted by: conjur
http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

Bravo on giving us the party line from www.fairtax.org. The problem with this line of thought is it would require the super wealthy to continue buying things at the rate they do now. Can you be sure this would happen? Also under the proposed "fair tax" corporations WOULD NOT PAY any tax. NONE.

On its face it looks like a good idea. But what happens if people do not buy as much stuff this year as they did last year (and when I am saying people, I am talking about Bill Gates types buying another private jet (which if it was used he would not pay ANY tax on). How can a country run on a fluid tax base? One year we have 2 Trillion in tax revenue the next we have 1.8 trillion, the year after that we have 2.5 Trillion. How do you budget?
Everyone (including the super rich) would get a rebate that is supposed to cover you for buying up to the poverty level but it is given to you monthly. So poor people would have to pay the same tax as the super rich on whatever they buy. Can you be sure people could afford this? Do you want people waiting to get their monthly check to buy food?

I encourage you to look over the plan and really think about what they are saying. Oh yeah, the Republicans laugh at the EU with their socialized medicine that is funded by a tax like this. But now they want to run a country on the same type of tax money? Interesting.

Incidentally, regardless of what fairtax.org may say, *I* specifically said that corporations would pay the same consumption tax as individuals, and I wouldn't have it any other way. I don't think any reasonable person would utterly exempt corporations from a consumption tax. In the first place because it wouldn't be fair (a corporation is a LEGAL person), but in the second place it would require a whole accounting system with deductions and all of that just like we already have. Stupid idea.

As for guaranteeing that the "super rich" would continue to buy at the same rate, what, do you think they'll all of a suddent cut themselves back to $30,000 a year lifestyles and hoard the rest? Get real.

Jason

 

[Stunt]

I think the reference was the fact that any money spent on a consumption tax...would be included in the new price of the product (ie. $40 to make, $50 to sell, but now with consumption tax costs $50 to make, they will then sell for $60). The consumer will always pay in the end with a consumption tax as proposed here.

So no...corperations would not be spending any money on consumption tax, it would just be another componant of the product's price.
But to be fair...all taxes do this...except for taxes on profits.

 

[DragonMasterAlex]

Originally posted by: KevinH

Originally posted by: ECUHITMAN

Originally posted by: DragonMasterAlex

Originally posted by: conjur
http://apnews.myway.com/article/20050303/D88JI49G0.html

WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax - such as a national sales tax - could spur greater economic growth.

The Fed chief made his comments in prepared remarks to the President's Advisory Panel on Federal Tax Reform. Revamping the complex tax code is an important goal of President Bush.

Greenspan pointed out the merits of a "consumption" tax, as well as the challenges of setting up such a tax.

Consumption taxes can take the form of national retail sales taxes or a value-added tax, imposed on the increased value of a good or service at each stage of manufacture and distribution and ultimately passed on to the consumer.

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

"However, getting from the current tax system to a consumption tax raises a challenging set of transition issues," he added.

Bush's advisers have spoken favorably of the economic benefits that could be achieved by moving from a system that taxes income to one that taxes consumption. However, Democratic critics contend such a consumption tax would hit low-income Americans the hardest.

Bush's aides have pointed out that the current tax system is actually a combination of a system that taxes income and one that taxes consumption. They note the creation of individual retirement accounts and other tax-deferred savings accounts allows taxpayers to shelter some investment earnings from tax.

Greenspan also said the tax panel will have to decide what type of system to use such as "a comprehensive income tax, a consumption tax or some combination of the two, as is done in many other countries."

The tax panel is responsible for coming up with recommendations to make taxes fairer and simpler. In addition to revamping Social Security, Bush wants to overhaul the nation's tax system - two centerpieces of his second-term economic agenda. Achieving both will be difficult politically and economically, especially against the backdrop of swollen budget deficits, analysts say.

Greenspan didn't offer a specific approach for policy-makers to follow as they consider an overhaul of the tax code.

But he did say that changes should be aimed at making the tax code easier for Americans to navigate, be fair and should contain an element of predictability so that businesses and consumers alike can look into the future and have a good idea what their tax obligations are - allowing them to plan ahead.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes," Greenspan said.

Seems this could be an even further burden on the lower and middle classes whose consumption of goods is a far greater share of their income (food, car purchases, clothes, etc.) than for the wealthy. Why not rollback Bush's ill-advised tax cuts from the last few years? If the economy is booming as much as the GOP claims, then giving back those tax cuts shouldn't send us spiraling into a recession. Then again, if the economy is booming, why is Greenspan looking to spur further economic growth? Wasn't 2004 Q4 GDP at 3.8%? What does he want? 6% GDP and a reason to keep bumping up interest rates?

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

Bravo on giving us the party line from www.fairtax.org. The problem with this line of thought is it would require the super wealthy to continue buying things at the rate they do now. Can you be sure this would happen? Also under the proposed "fair tax" corporations WOULD NOT PAY any tax. NONE.

On its face it looks like a good idea. But what happens if people do not buy as much stuff this year as they did last year (and when I am saying people, I am talking about Bill Gates types buying another private jet (which if it was used he would not pay ANY tax on). How can a country run on a fluid tax base? One year we have 2 Trillion in tax revenue the next we have 1.8 trillion, the year after that we have 2.5 Trillion. How do you budget?
Everyone (including the super rich) would get a rebate that is supposed to cover you for buying up to the poverty level but it is given to you monthly. So poor people would have to pay the same tax as the super rich on whatever they buy. Can you be sure people could afford this? Do you want people waiting to get their monthly check to buy food?

I encourage you to look over the plan and really think about what they are saying. Oh yeah, the Republicans laugh at the EU with their socialized medicine that is funded by a tax like this. But now they want to run a country on the same type of tax money? Interesting.

And of course, you can predict all this with perfect accuracy, right?

Jason
Exactly. The consumption tax sounds great and all but it assumes that people's spending habits will remain consistent which it won't.

 

[DragonMasterAlex]

Originally posted by: MadCowDisease

Originally posted by: DragonMasterAlex

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

Consumption and income do not share a linear relationship. If anything, it seems that as income increases at obscene rates consumption tapers off a bit - it is still high, but it does not comprise as large a quantity of living expenses as people in the middle/working class. A flat consumption tax would only work if the relationship was linear.

I don't know that that's true, I certainly haven't seen any evidence to that effect. Moreover, I think I have a stomach flu so I don't really have the energy to figure it out today.

Jason

 

[BaliBabyDoc]

I think consumption taxes are a good idea as long as it's not promulgated as a "replacement" for income tax. Consumption taxes should also exempt basic necessities: food (all except prepared food), medication, cars up to 20k, rent up to $XXX, home sales up to $1XX,XXX. You could then levy a flat consumption tax without being horribly regressive or having to develop formulas for "refunds" to low income people. Low and middle income people in America are already consuming a % point or so MORE than they earn, so it's unlikely such changes will have a significant effect on consumption amongst them.

We could do something similar with income tax. I would shift all brackets down while eliminating the lowest one (if you currently qualify for the bottom bracket you would no longer pay income tax). If you prefer a "flatter" tax code, we could merge the two on the bottom (keep the low figure) and merge the top two (keep the higher figure). A totally flat income tax wouldn't make sense unless we exempted a lot of people. Again, it's likely to have a minimal effect on consumption at the top and bottom.

 

[CADsortaGUY]

Greenspan is right.

Now about all this "linear" crap. You are talking about costs of living - ofcourse it's not linear - nor should it have to be. I just got a 17.6% raise yesterday(WOOT GO ME AND DAMN THIS BUSH ECONOMY ) but my cost of living didn't change a cent from yesterday morning to this morning. Will I end up spending more - sure. Will I end up investing more? Sure. But my "cost of living" vs income percentage declined as of 1:45 yesterday afternoon. A consumption tax is the fairest tax structure there is because it doesn't play around with socio-economic feelings and manipulating - Everyone who purchase item X pays X*xx% tax. As it sits now, everyone who purchases X pays a different rate on that money they spent because their income was taxed on an archaic and feeling based system. Just because you feel the rich should pay more for the same thing doesn't mean it's right.

Absolutely disgusting that people buy into the whole "from each ... to each" trash.

CsG

 

[Stunt]

But CAD, the consumption tax would be different per item i imagine, and a high consumption tax could be enacted to pay for the social programs you are not fond of. This is just another way to MAYBE create a flat tax (assuming luxury items are not tax more heavily than basic items).
I say don't mess with the system, you have far too much to loose. Tell iraq to do it...they can be your guinea pig

 

[Kipper]

Originally posted by: DragonMasterAlex

Originally posted by: MadCowDisease

Originally posted by: DragonMasterAlex

I am no tax expert, but a consumption (read: Sales) tax that REPLACES income tax would be better for everyone all around, and we could eliminate the needless waste of Tax Returns, complex rules and expensive tax preparation agencies. Further, if the tax were even across the board for EVERYONE, with NO exemptions whatsoever, you'd eliminate any complaints about *anyone*, from corporations to the rich to the just-doing-pretty-good folks "not paying their fair share", because *everyone* would be paying the same percentage.

In any case, the last thing that's wise to do is imagine that anyone here knows *nearly* as much as Greenspan about finances. The man could outthink the ENTIRE collective intelligence of P&N any day of the week when it comes to finance.

Jason

Consumption and income do not share a linear relationship. If anything, it seems that as income increases at obscene rates consumption tapers off a bit - it is still high, but it does not comprise as large a quantity of living expenses as people in the middle/working class. A flat consumption tax would only work if the relationship was linear.

I don't know that that's true, I certainly haven't seen any evidence to that effect. Moreover, I think I have a stomach flu so I don't really have the energy to figure it out today.

Jason

Ever eaten pizza and gotten sicker and more disgusted of the pizza as you eat more slices?

Similar concept.

 

[SuperTool]

It's a terrible idea. Consumer spending is what sustains our economy. Raising $2Trillion a year with sales taxes would require sales tax rates north of 20%, in addition ot the state local sales taxes that could push that number north of 30%. Can you imagine what having to pay a third of a car's value in taxes when you buy it is going to do to the market?

 

[dmcowen674]

Originally posted by: CADsortaGUY
Greenspan is right.

Now about all this "linear" crap. You are talking about costs of living - ofcourse it's not linear - nor should it have to be. I just got a 17.6% raise yesterday(WOOT GO ME AND DAMN THIS BUSH ECONOMY ) but my cost of living didn't change a cent from yesterday morning to this morning. Will I end up spending more - sure. Will I end up investing more? Sure. But my "cost of living" vs income percentage declined as of 1:45 yesterday afternoon. A consumption tax is the fairest tax structure there is because it doesn't play around with socio-economic feelings and manipulating - Everyone who purchase item X pays X*xx% tax. As it sits now, everyone who purchases X pays a different rate on that money they spent because their income was taxed on an archaic and feeling based system. Just because you feel the rich should pay more for the same thing doesn't mean it's right.

Absolutely disgusting that people buy into the whole "from each ... to each" trash.

CsG

Congrats on the exceptional raise.

Do you honestly believe the rest of Country is seeing a raise like that?

Most people are working longer hours and not seeing raises in years.
On the public sector, Teachers across the Country not seeing raises in at least two years. Fireman being cut because the local Govts say there is no money.

Unfortunately this means you will sink even further into not having any concept on what the majority of the Country is experiencing.

 

[Genx87]

On its face it looks like a good idea. But what happens if people do not buy as much stuff this year as they did last year (and when I am saying people, I am talking about Bill Gates types buying another private jet (which if it was used he would not pay ANY tax on). How can a country run on a fluid tax base? One year we have 2 Trillion in tax revenue the next we have 1.8 trillion, the year after that we have 2.5 Trillion. How do you budget?

How did this country run before we had federal income taxes?!?!?!?!?

The problem is now our govt is so bloated with social programs that you are right, we cant run it on a fluid tax revnue stream. It has to be pretty steady with minimum expectations. Such a shame at one point we never had this problem.

Exactly. The consumption tax sounds great and all but it assumes that people's spending habits will remain consistent which it won't.

Surprisingly many rich people do spend lots of money. And surprisingly lots of rich people actually manage to pay really low income taxes thanks to loopholes and really good tax advisors. Theresa Heinz kerry earned over 5 million last year and paid in the 11% tax bracket. She isnt alone on people making craploads of money. So it is probably wont affect the super rich much either way.

It's a terrible idea. Consumer spending is what sustains our economy. Raising $2Trillion a year with sales taxes would require sales tax rates north of 20%, in addition ot the state local sales taxes that could push that number north of 30%. Can you imagine what having to pay a third of a car's value in taxes when you buy it is going to do to the market?

I also share their fear that people will be sticker shocked. But you have to remember that they will also have a larger take home pay because there would be no federal income tax.

 

[CADsortaGUY]

Originally posted by: SuperTool
It's a terrible idea. Consumer spending is what sustains our economy. Raising $2Trillion a year with sales taxes would require sales tax rates north of 20%, in addition ot the state local sales taxes that could push that number north of 30%. Can you imagine what having to pay a third of a car's value in taxes when you buy it is going to do to the market?

:roll: Yet it's the same money - no? You want to take people's labor instead of what they consume(buy/purchase/use).
Can you imagine what paying a third of your earnings in taxes before it hits the bank will do to people's budget?

CsG

 

[charrison]

Originally posted by: Skoorb
How about Bush stop running up the deficit?

When everyone is paying the cost of goverment, deficits would shrink rapidly.