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Discussion Starter #1
I've been a fan of this for a while, nice that Greenie agrees. :)

http://www.fortwayne.com/mld/journalgazette/11050474.htm

Posted on Fri, Mar. 04, 2005
Associated Press

Greenspan talks up tax on spending
Tells Congress it would help economy grow


By Joel Havemann

Los Angeles Times

WASHINGTON – Federal Reserve Chairman Alan Greenspan on Thursday nudged President Bush’s tax overhaul panel in the direction of relying more on taxing personal consumption and less on taxing income, saying it would encourage people to save and invest more of the money they earn.

He argued that the money saved would create assets that could then be used for investment in the nation’s economy.

“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,” he told the panel.

Greenspan did not propose throwing out the income tax in favor of a sales tax, nor did he oppose it. But he seemed to lean toward a mixed system, favored by many European countries, in which income and consumption are taxed.

The advantage of a consumption tax – a sales tax is one example – is that it does not tax income that is saved and invested, Greenspan said.

“I believe that, as the baby boom generation begins to retire in a few years, it will become increasingly important for the nation to boost resources available” by promoting savings and promoting participation in the labor force, he said. “The tax system has the potential to contribute importantly to those goals, and, at a minimum, tax reform should not hinder the achievement of those objectives.”

Greenspan was the leadoff witness during the second hearing of the President’s Advisory Panel on Federal Tax Reform. President Bush has said that simplifying the tax code is his No. 2 domestic priority after Social Security overhaul.

Bush has given his advisory panel until July 31 to offer multiple options to Treasury Secretary John Snow, and the president has given Snow until the end of the year to send a recommendation.

After Greenspan was James Baker, who was President Reagan’s Treasury secretary in 1986, when Congress last simplified the tax code. The 1986 revisions, Baker said, reduced the number of tax brackets from 14 to two, eliminated scores of tax breaks and slashed the top personal tax rate from 50 percent to 28 percent.

“Regrettably,” Baker said via closed-circuit television from his office at Rice University in Houston, “this sweeping reform proved transitory, as subsequent decades saw marginal rates raised and some deductions and loopholes restored.”

Greenspan noted with approval that the United States already was drifting toward a consumption tax by giving favorable tax treatment to money saved, as opposed to money spent. Capital gains and dividends, for example, are taxed at a maximum rate of 15 percent.

Responding to Democrats’ assertions that a consumption tax would more severely affect poorer people, because a larger share of their income goes for such items as food, clothing and medication, Greenspan suggested that certain items “disproportionately consumed in the lower brackets” could be excluded from taxation, although he offered no specifics.

In most states with a sales tax, food items and prescription drugs are exempt.
 

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I'm all for it if it *replaces* the federal income tax, I'm not in favor of it supplementing he income tax. Consumption tax the only system where everybody pays - even drug dealers will be paying taxes. The current income tax system seems so anti-capitalism to me. Now, the more money you make, the more you are punished by having to pay a higher percentage of taxes.
 

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91 16V Jetta said:
I'm all for it if it *replaces* the federal income tax, I'm not in favor of it supplementing he income tax. Consumption tax the only system where everybody pays - even drug dealers will be paying taxes. The current income tax system seems so anti-capitalism to me. Now, the more money you make, the more you are punished by having to pay a higher percentage of taxes.
I agree 100%.
 

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I'm in! If-and-only-if it eliminates income tax. If it doesn't, then we've shafted ourselves into double-taxation.

Exempt food, medicine, and any other easily-definable necessity, and it shouldn't be any more of a burden to the poor than the current system.

(...wondering how big the H&R Block lobby is...)
 

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Rusty said:
I'm in! If-and-only-if it eliminates income tax. If it doesn't, then we've shafted ourselves into double-taxation.

Exempt food, medicine, and any other easily-definable necessity, and it shouldn't be any more of a burden to the poor than the current system.

(...wondering how big the H&R Block lobby is...)
Most plans allow for some type of earned income credit for those below the poverty line just like today's income tax.

My guess that any flat tax will continue to have social security taxed on income. Not sure what they would do with medicare though.
 

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I think it is a great idea, but then how can the government do it's most important job of all -- redistribute wealth. I'm pretty sure it's in the constitution somewhere...
 

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JamesBondage said:
I think it is a great idea, but then how can the government do it's most important job of all -- redistribute wealth. I'm pretty sure it's in the constitution somewhere...
We'll one could argue it's part of 'promote the general welfare'.

It's a good idea, but it won't happen. Taxing consumption would destroy a good deal of the special interest tax laws that someone spent a lot of money to get on the books.
 

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Hmmmm.

So a poor family has to spend 100% of their income to survive, so they'd be taxed on 100% of every penny they earn.

A rich family has to spend 20% of their income to survive, so they'd be taxed on 20% of every penny they earn.

Another win for the rich heterosexual white man.

Yep, totally fair.
 

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assuming the aforementioned poor family spends all their money on necessities (detailed on some list i suppose) they won't be taxed at all...

a.s.
 

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Sharky said:
Hmmmm.

So a poor family has to spend 100% of their income to survive, so they'd be taxed on 100% of every penny they earn.

A rich family has to spend 20% of their income to survive, so they'd be taxed on 20% of every penny they earn.

Another win for the rich heterosexual white man.

Yep, totally fair.
That argument doesn't hold water. ALL money will EVENTUALLY be spent and taxed. Doesn't matter if you're rich/poor/middle income, etc. 100% of the money that YOU spend will be taxed. 100% of the money the POOR PERSON spends will be taxed.
 

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91 16V Jetta said:
That argument doesn't hold water. ALL money will EVENTUALLY be spent and taxed. Doesn't matter if you're rich/poor/middle income, etc. 100% of the money that YOU spend will be taxed. 100% of the money the POOR PERSON spends will be taxed.

You couldn't have missed the point more thoroughly if you had tried....

You're probably also one of the morons that thinks the capital gains tax is a "double" taxation...
 

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Sharky said:
Hmmmm.

So a poor family has to spend 100% of their income to survive, so they'd be taxed on 100% of every penny they earn.

A rich family has to spend 20% of their income to survive, so they'd be taxed on 20% of every penny they earn.

Another win for the rich heterosexual white man.

Yep, totally fair.
Look, we talking about taxing CONSUMPTION, not earning. The rich consume more, they are taxed more. It is still a very "progressive" tax. Plus will so much liberated income available, investment (capital investment, not stock and bonds -- do you know what that means?) will rise dramatically. Supply-side economics is far from perfect, but it does hold some merit in this situation. But why argue? This will NEVER happen.
 

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To sharky, fair is not having everyone paying the same percentage. It's a valid philsophical view to hold.
 

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Urlik said:
To sharky, fair is not having everyone paying the same percentage. It's a valid philsophical view to hold.
Its neat how you Republicans get more indignant about giving po' folks a break than you do giving your beloved big corporations a break. I know its much easier for you guys to be disgusted with some loser working at Burger King than it is some $10 million dollar a year CEO that shops cities until someone is dumb enough to give him a tax break until the year 2085. Makes you feel superior. I get it.

Kind of like Wal-Mart does. When the tax break ends, they close the store.

Totally their right, but to me, that is way more disgusting than Burger King dude maybe not paying the same amount in tax as a percentage of his gross income as greedy CEO dude.
 

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Sharky said:
Its neat how you Republicans get more indignant about giving po' folks a break than you do giving your beloved big corporations a break. I know its much easier for you guys to be disgusted with some loser working at Burger King than it is some $10 million dollar a year CEO that shops cities until someone is dumb enough to give him a tax break until the year 2085. Makes you feel superior. I get it.
And the fact that you can take the moral highground claiming how much you "FEEL for the poor" or how you "respect diversity and tolerance" or you "are against violence, war, killing and rape" somehow implies that republicans don't feel the same way about that stuff? Makes you feel superior. I get it.
 

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There would be a greater consumption tax on gas too. Do you fancy paying $6 per gallon? Ouch!

Our Government here in the UK, after ramping up the tax on gas (400% of the original price - sorry to go over old ground yet again, bit it really pi$$es me off!) would mislead you into thinking that you'll all go green and take the bus instead. But they don't want you to do that either because of the loss in tax revenue from dropping fuel sales. However, they don't want to spend any serious money on making the roads better either :crazy:!

Nuts i'd say! We still pay income tax, and national insurance!
 

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Sharky said:
Its neat how you Republicans get more indignant about giving po' folks a break than you do giving your beloved big corporations a break.
If taxation should be progressive or not is a valid philosophical argument. Sorry you think only your philosophy can be correct.
 

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Chilledgibbo said:
There would be a greater consumption tax on gas too. Do you fancy paying $6 per gallon? Ouch!

Our Government here in the UK, after ramping up the tax on gas (400% of the original price - sorry to go over old ground yet again, bit it really pi$$es me off!) would mislead you into thinking that you'll all go green and take the bus instead. But they don't want you to do that either because of the loss in tax revenue from dropping fuel sales. However, they don't want to spend any serious money on making the roads better either :crazy:!

Nuts i'd say! We still pay income tax, and national insurance!
No need to be sorry for going over old ground. These left wing liberal democrats here in the U.S. need to keep hearing how bad it can get again and again. Government control=bad.
 
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