Federal Reserve Chairman Alan Greenspan weighed in on tax reform yesterday, endorsing a move toward a consumption tax, while cautioning against rapid, wholesale change.
"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.
That should provide a boost to the Fair Tax bill introduced and championed by Georgia Congressman John Linder, a member of the House Ways and Means Committee. Congressman Linder (R-GA), reintroduced his personal consumption tax proposal, H.R. 25, also known as the “FairTax.” on the first day of the 109th Congress.
There are several Republican lawmakers who recognize that tax reform and social security reform need to be considered together. A total tax overhaul will take enormous political effort, but Linder sees good momentum in Congress. It’s time to get behind this commonsensical tax bill that lives up to its name—“fair tax.”
Toward the Fair Tax: Greenspan Endorses Move to Consumption Tax
Friday, March 04, 2005
--James Jewell
Posted by rooftop at 9:20 AM
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3 comments:
If the fairtax would work -- fine. But its largely a fallacy.
For one thing, it depends on the absurd notion that the federal government can raise revenue by taxing itself.
Ask Mr Greenspan if that trick is possible.
Neal Boortz wrote "The federal government itself will become a major taxpayer" (Page 148 Fair Tax Book).
Nonsense - Thats like me paying myself 500 dollars for cutting my own grass.
Fairtax planned on getting 300-500 billion -- by taxing itself! So when that doesn't materialize, the rate would have to be 34-38%.
Fairtax plans on taxing cancer patients on their surgery, on their chemo, on their hospital bill. One cancer patient could be taxed 100K.
Fairtax plans on taxing ALL health care -- a 2 trillion dollar market - 23%. That means people getting health care will be taxed a combined 460 billion.
That means nursing home paitents could be taxed 40K a year -for a sales tax on their nursing home bill!
It means the parents of a child with leukemia could get a "sales tax" bill of 70K.
Its utter nonsense. These patients will scream bloody murder when they find out that fair tax shifted much of the tax burden onto them!
And Congress won't make the elderly and sick pay these huge sales taxes. The 460 billion dollars Fairtax depended on -- just won't be there. Just like the 300-500 billion they pretended to tax government won't be there either.
Fairtax plans on taxing people who rent -- rent ANYTHING - the "sales" tax. There are 42 million people who rent their housing in the USA -- and I bet not ten know that fairtax is trying very hard to raise their rent expense 30-40%.
And these renters will be pissed.
Fairtax also taxes insurance premiums. Few americans know that.
Imagine you wake up one day, a week after Fairtax passes, and your rent went up 500 dollars, your utilities went up 300 dollars, your back operation went up 20,000 dollars.
You thought prices were going DOWN. But you just had 21,000 dollars extra in taxes. And you dont even MAKE 21K .
DO you think you might be a tad pissed off?
THere are going to be a lot of pissed off people if this passes.
I can't wait!
I hope the fairtax is passed, I would LOVE to see the uproar that would follow!
Mark's Comments are that of someone who doesn't know doodley squat about what he is commenting on. He obviously doesn't understand the laws of supply and demand that control all economics. He wants you to think that the only thing happening with implementation of the "Fairtax" is a tax increase. This "unfair" assessment given by opponents is common and erroneous. What he does not tell you, (or possibly understand), is that the consumption tax replaces all other taxes that each of has, plus the taxes paid by the employers involved in the production of goods that we purchase, thereby reducing the costs of producing the goods. This offsets the taxing differences by lowering the "price" of such goods. In addition each of us hardworking folk get to take home all of our paycheck instead of just after tax dollars, plus the monthly "prebate" we each get, (including the poor who pay little or even no taxes now) to offset taxes normally paid on life essentials. As far as taxing high cost services Mark mentioned, the savings alone from not having to deal with the abominably high cost of "tax laws and deductions", would offset any increases tax revenue generated by the "Fairtax". As far as the government paying taxes is concerned, just reducing the billions of dollars cost of the IRS by changing it to a funds distribution dept., would offset the tax paid cost as well as keeping everything the same for everyone, including the govt. thereby simplifying the whole process. To me, Marks comments reflect alot of the comments I hear out there that shout to us, "don't bother me with details". Well Mark, the Fairtax simplifys all of our lives, including yours, where we all don't have to sweat details.
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