Fed Chief Calls for National Sales Tax
By George Anderson
Federal Reserve Chairman Alan Greenspan believes that moving from an income tax to a national consumption or sales tax could spur economic growth.
Speaking to the President’s Advisory Panel on Federal Tax Reform, Mr. Greenspan acknowledged that moving to a consumption tax from an income tax would draw opposition from groups that believe they or their constituents would be adversely affected by a switch from the current income formula.
He suggested that perhaps some combination of income and consumption taxes would be best as a compromise and/or interim step.
Regardless of the final decision concerning any change in the current tax system, Mr. Greenspan said, “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.”
Moderator’s Comment: Should the retail industry drop its historical opposition to a national sales tax if there is a reduction or elimination of the
Retailers, with reason, have always been suspicious of talk about a national sales tax, even if there was the promise that the income tax model would be
changed. It’s a lot harder to undo a bad government program than it is to create it. Still, a national sales tax with some exemptions is worth considering if it helps to reduce
complexity (and the costs to individuals and businesses) in the tax code elsewhere. –
George Anderson – Moderator