Consumption Tax Gets White House Backing

Discussion
Feb 10, 2003
George Anderson

By George Anderson


A report prepared by the White House Council of Economic Advisers makes the case for sweeping changes in how Americans are taxed, says a report in The Wall Street Journal.


The report emphasizes the benefits of moving to a consumption tax from the present income tax system. According to the Journal’s analysis of the report, “Shifting to a consumption tax would reduce distortions in economic decisions, simplify the tax system and increase incentives for saving and investment, which would boost growth and wages.”


A consumption tax system could “deliver a one-time boost to the level of annual economic output of as much as 6%” and broaden “the tax base to cover a lot of income that now escapes taxation,” says the report.


Moderator’s Comment: Would a system based on consumption
benefit retailers more than the current income tax?


Retailers depend on expanding consumption for growth.
A consumption tax would, logically, promote saving. [George
Anderson – Moderator
]

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