Hoover Institution: Opinion: Edward Paul Lazear: How to Energize a Lackluster Recovery: The Benefits of a Consumption Tax over the Income Tax

Hoover Institution: Opinion: Edward Paul Lazear: How to Energize a Lackluster Recovery

Rik Schneider on Google+

The New Democrat on Facebook

The New Democrat on Twitter

This post was originally posted at The New Democrat on Blogger

The U.S. income tax is now the biggest book ever written in the history of the world, at least as far as I know, standing at over one-million pages.  How would you like that for a book review homework assignment?  This system is in drastic need of reform.  I propose a National Progressive Consumption Tax or NPCT.

This eliminates, perhaps,  the biggest book  in world history and tells Americans that what they make and earn is legally and officially theirs but Uncle Sam will take a percentage of what they spend to provide the needed services that only the Federal Government can.  This system eliminates a lot of taxpayer funded subsidies to businesses and wealthy individuals.  No one would be able to avoid the NPCT except the working poor who would receive a scale of exemptions to replace the Earned Income Tax Credit.  They would be eligible for other subsidies to help them move up the economic ladder simply by reporting their annual income to the IRS.  The NPCT would be progressive because low-income people spend almost all of their money on the basic necessities of life which would be taxed at a lower rate than luxury goods.

The NPCT would be good for economic growth.  Taxes on capital gains and business incomes could be reduced.  Basic necessities would be taxed at low rates.  Food, housing, and non-luxury transportation will be consumed because people have to have those things.  The wealthy would continue to spend money on their play toys even if those things are taxed more highly.

Savings will be encouraged, resulting in less consumer debt.  In the next recession, people would have the means to continue supporting themselves and we would have less need for public assistance.  


About Rik Schneider

Blogger/writer on a lot of different subjects.
This entry was posted in Economy and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.