Greenspan Touts Idea of a Consumption Tax

ABC News/AP ^ | March 3, 2005 | JEANNINE AVERSA

[FairOpinion]

WASHINGTON Mar 3, 2005 — 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.

"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.

[manic4organic]

BUMP for fairness!

[Your Nightmare]

Your misrepresentations are neither.

This is where I ask you for a specific example and you don't provide one.

[Principled]

This is where I ask you for a specific example and you don't provide one.

he he he... been there, done that.

The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.

[ancient_geezer]

I have presented numerous sources that state the opposite.

You have presented numerous excerpts that are taken out of author's context addressing add on taxes and VAT/Flat Taxes only, and not discussing the overall effects reduction of the full overhead costs related to business income and payroll tax system repealed by the Fair Tax Act and replacement by a single stage, single rate, retail sales tax at only the retail purchase of new goods and products.

In fact you have been expressly caught misrepresenting the point of authors directly contradicting your assertions. ==> President's Advisory Panel on Tax Reform #105

[Your Nightmare]

he he he... been there, done that.

And each time I ask, you fail to provide. This time is no exception.

The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.

Exactly. And if you are replacing employees income and payroll taxes, how do you expect prices to drop because they aren't paying these any longer unless you drop their nominal wage by the amount they were previously paying in taxes? It doesn't matter to the employer if the employee is paying income/payroll taxes unless he's able to reduce his nominal wage.

[Principled]

That's just one of the bad ones. What about the one where he left out from his excerpt "compared to a situation with NO taxes"???!!!

[Principled]

look up one post

[iconoclast]

If all the way along the production-distribution chain 17%, say, of value added is taxed, that is both the nominal rate and the total tax included in the final retail price.

I can take a small, simple example and validate your statement.

But if the Vat is that simple and transparent, why the existence of Vat tax consultants?

[Principled]

... if you are replacing employees income and payroll taxes, how do you expect prices to drop

By eliminating the income taxes, payroll taxes, and compliance/overhead costs of all businesses in the chain of production...all links in the chain of production.

That's what the research shows.

And since business purchases are not taxed, there is a savings of 22% or so to the producers. Then, add the nrst and prices are back to today's level.

[Your Nightmare]

You have presented numerous excerpts that are taken out of author's context addressing add on taxes and VAT/Flat Taxes only, and not discussing the overall effects reduction of the full overhead costs related to business income and payroll tax system repealed by the Fair Tax Act and replacement by a single stage, single rate, retail sales tax at only the retail purchase of new goods and products.

BS. The quotes I posted were fully in the context of what I was discussing. The affirm the quotes of several other economists in regards to how eliminating the payroll/income tax would affect prices and wages.

If you want to discuss dead weight costs, compliance, etc. we can do so, but that is a separate issue from my point.

[Your Nightmare]

"compared to a situation with NO taxes"???!!!

You guys are the biggest bunch of kooks since Scientology.

[expatpat]

That I agree with. But do we agree that gross prices will increase?

[Principled]

That I agree with. But do we agree that gross prices will increase?

No. I don't see prices increasing. The costs that are eliminated from the production chain come to 22% or so. That's the amount of the nrst.

Perhaps I should add that the price will remain constant in any competitive industry.

[expatpat]

Employees' gross pay stays the same, and prices stay the same.

If by 'prices' you mean gross after-sales-tax prices, then you are dreaming. The large amount of money the Feds need has to come from somewhere. Or, from the other point of view, the business can't reduce prices by the amount of the sales tax if his labor costs don't go down.

[expatpat]

Gross price including NRST is actually expected to fall 3-10% over time

Oh boy, that's where you supporters of the FairTax are way off base. See #274.

[ancient_geezer]

If you want to discuss dead weight costs, compliance, etc. we can do so, but that is a separate issue from my point.

ROTFLMAO!! Those cost you so cavalierly toss away as a separate issue are the issue and always have been, that with tax repeal, make up the full potential for decline in prices received by thge producer(i.e. before NRST prices!!!)

Obtuse as ever I note!!!

I have never made but one prayer to God, a very short one: "O Lord, make my enemies ridiculous." And God granted it.
-- Voltaire

[Principled]

Labor cost does go down. At each stage in the chain, no more employer "contribution" payroll taxes have to be recovered in prices. At each stage of the production chain, no more income taxes have to be recovered in prices. At each stage of the production chain, no more compliance costs - well, 90% of compliance costs are gone from each stage - that no longer have to be recovered in prices, and at each stage of the production chain, no more tax overhead costs have to be recovered in prices.

These cost come to 20-30% of existing prices, depending on which research you examine.

The elimination of 23% and the subsequent addition of the same amount yields an equivalent total.

[Big Red Clay]

I just wanted to let you guys know about an experience I had last week with one of our esteemed legislators. As my past posts will affirm, I am a big fan of the NRST so don't shoot the messenger.
Chuck Hagel came to tour the facility that I work at and was nice enough to spend a little time with us voters. He took only two questions and mine was one of them. I asked him what his views were on the NRST as a form of tax reform. He looked at me like I was a total ass. He then asked "Has that even been introduced yet?" I told him that I believed it had been, gave him the bill number and stated that it was still in committee. He said "Well that's probably as far as it is gonna get" and then started talking about Social Security and yada yada. The tone he used when he responded to me seemed like I asked him about a bill to legalize molesting children.
Take this for what you will. It sure didnt seem like this was anything he was interested in, though. It sure made me question why I voted twice for the guy.

[Principled]

AG: Gross price including NRST is actually expected to fall 3-10% over time

EXP: Oh boy, that's where you supporters of the FairTax are way off base.

It's not the supporters who came up with that figure. They were PhDs and LLMs in taxation from Stanford and Harvard among others who did the research that came up with that number.

[Badray]

Thanks, CG. These questions are above my pay grade. ;-)