Greenspan flips bonnet

[David S]

Alan Greenspan who is normally somewhat of a free market advocate has gone off the deep end. He is now proposing a consumption tax in addition to the income tax. This move would give government a 3 pronged attack on your money. If you earn it they tax it. If you save it they tax it via inflation. And now if you spend it they tax it.


http://portal.wowway.com/news/read.php?id=13006420&ps=1014&srce=news_class&action=1

[angus]

Note to the english:  a bonnet is not the cover of the engine of the car in this case.  Neither is it a hat.  the bonnet flipping is a metaphor for the changing of one's mind so radically that he appears to be insane.

David, it doesn't matter.  greenspan is not a legislator.  And his clout with the GOP and the democrats is running low just now.  I don't see this happening.  Do you?

[A18]

What's the problem?

I'll admit I didn't read the entire article, but from what I understand he's saying switching from an income tax to a consumption tax all at once would be too drastic of a change.

We could gradually reduce the income tax and phase in a consumption tax. Surely that's only practical.

I would strongly favor this as a long term measure. In the mean time, we should move towards a progressive flat tax.

[David S]

Note to the english:  a bonnet is not the cover of the engine of the car in this case.  Neither is it a hat.  the bonnet flipping is a metaphor for the changing of one's mind so radically that he appears to be insane.

David, it doesn't matter.  greenspan is not a legislator.  And his clout with the GOP and the democrats is running low just now.  I don't see this happening.  Do you?

Thank you for explaining my metaphor. As for whether it will happen or not, well nothing surprises me these days.

[angus]

progressive flat tax.

Civil War

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Army Intelligence

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.....


you really must be phillip   

[David S]

What's the problem?

I'll admit I didn't read the entire article, but from what I understand he's saying switching from an income tax to a consumption tax all at once would be too drastic of a change.

We could gradually reduce the income tax and phase in a consumption tax. Surely that's only practical.

I would strongly favor this as a long term measure. In the mean time, we should move towards a progressive flat tax.

The only way a sales tax would be acceptable would be if the 16th amendment would be repealled and the income tax  eliminated. Otherwise you will end up with both forever.

[angus]

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

good point. 

[A18]

Greenspan is not calling for a net tax increase. We're talking about adding a consumption tax while cutting personal tax rates in proportion.

Yes, this would not be good for retired people, who no longer pay personal income tax but do consume. That's why it can't all be done at once -- we need a transition period.

In other words, little by little we cut the income tax while raising the sales tax until we've finally eliminated the former.

This curtails the disastrous economic effects an instant transition would have on some people, particularly the elderly.

Switching from one system to another means double taxation for everyone who already paid income tax, so prudence demands gentle shifts.

[A18]

The only way a sales tax would be acceptable would be if the 16th amendment would be repealled and the income tax  eliminated. Otherwise you will end up with both forever.

This is a common saying, but why? Why does the fact that Congress can lay and collect an income tax automatically mean they'll collect one?

Under the Constitution, the Congress can lay and collect a national sales tax. Yet, as of right, none of us pay one.

[A18]

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

good point. 

Third post in a row, sorry, but there's something else to point out here.

If the 16th amendment were repealed, the payroll tax would be unconstitutional. And Social Security and Medicare -- no longer being funded on a person by person basis -- would both inevitably evolve into welfare programs.

[Trilobyte]

This move would give government a 3 pronged attack on your money. If you earn it they tax it. If you save it they tax it via inflation. And now if you spend it they tax it.

I always thought libertarians prefer taxing consumption to taxing income. Greenspan's suggestion would lower the income tax, which seems very typical of him. Why don't you like it?

Regardless, consumption taxes favor the rich, so it will be difficult to find public support for such a switch.

[David S]

This move would give government a 3 pronged attack on your money. If you earn it they tax it. If you save it they tax it via inflation. And now if you spend it they tax it.

I always thought libertarians prefer taxing consumption to taxing income. Greenspan's suggestion would lower the income tax, which seems very typical of him. Why don't you like it?

Regardless, consumption taxes favor the rich, so it will be difficult to find public support for such a switch.

I do support the idea of a sales tax, instead of the income tax, but definitely not in addition to it. Currently the government takes in about $1.8 trillion through all revenue sources. That's a huge figure but it still isn't enough to fund all of their goofy programs, so they resort to deficit spending to make up the difference. Now if you give them another source of income, do you really think they will ever relinquish it?

Creating a new tax is not popular with the voters, so the politicians have to be careful about it. Its much more marketable if they say it will replace the income tax. Then you aren't really making a new tax, just replacing an unpopular tax with a less offensive one. Some people might accept the phase-in idea believing that the income tax would quickly be gone. All I can say is I wasn't born yesterday. Once the politicians get their hand in your pocket they will never take it out.

[A18]

David, you're already paying sales tax, along with the citizens of just about every other state in the union.

That being the case, it's not as if the consumption tax would be any more of a hassle. Why do you care if the federal government takes your money as income or a fraction of a purchase price?

What matters is how much they take.

Greenspan is talking about lowering the income tax and introducing a consumption tax.

Even if you are right, and the income tax is never phased out, we'll just be in the exact same situation we are now -- paying both a personal income and national sales tax.

[A18]

progressive flat tax.

Civil War

Jumbo Shrimp

Army Intelligence

Pretty ugly

idiot savant

black light


.....


you really must be phillip   

I am sorry to say that I do not understand this post in the least.

[angus]

I retract the phillip comment.  It was a joke at your expense and I should note that I do not believe you are phillip.  Actually, I don't think phillip needs to resort to ghost-posting anyway.  He seems as comfortable as anyone I can imagine.  Though we're all pretty sure Machiavelli is.  Or at least have some theories.  I know I do. 

Greenspan is like the Boston Red Sox of FRB chairs.  Know what I mean?

[David S]

Maybe I'm reading between the lines but the Democrat’s reaction to Greenspan’s speech makes me think they are looking for both taxes together. I can practically see them salivating at this additional source of revenue.
http://portal.wowway.com/news/read.php?id=13006746&ps=1014&srce=news_class&action=2
The panel's vice chairman, former Sen. John Breaux, D-La., said it was important that the Fed chief asserted income and consumption taxes could work together.
"He said you could do both," Breaux said. "I don't think he endorsed it, but his saying that it can work, like many other countries have done, I think was a very significant statement."

Tell me what you make of that.

[David S]

David, you're already paying sales tax, along with the citizens of just about every other state in the union.

That being the case, it's not as if the consumption tax would be any more of a hassle. Why do you care if the federal government takes your money as income or a fraction of a purchase price?

What matters is how much they take.

Greenspan is talking about lowering the income tax and introducing a consumption tax.

Even if you are right, and the income tax is never phased out, we'll just be in the exact same situation we are now -- paying both a personal income and national sales tax.

We don't have a national sales tax now except for a few items like gasoline. You assume that the total amount paid will stay about the same. I'm saying that we will be paying much more ultimately.

Also, in the past the national sales tax has been proposed as a replacement for the income tax. That’s desirable because it means never having to fill out income tax forms again. If you haven’t done US income taxes before, you can get some idea of what a pain in the neck it is by looking at page 75 of the 1040 instruction manual at http://www.irs.gov/pub/irs-pdf/i1040gi.pdf.  This shows the average time required to gather data, fill out the forms, etc. If you have to do Form 1040 plus schedules A,B and D it adds up to about 20 hours.

I usually have mine done by H&R Block at a cost of about $280, and it’s still a pain. Most taxpayers would be happy to be rid of that mess. But if you have both the sales tax and income tax then you’re still stuck with doing taxes.

[A18]

There is no reason to believe that will be the case.

The idea here is to lower the income tax in proportion to the sales tax increase.

You're basically saying, they could end up taxing us more. Well, they could do that if we still just had an income tax.

The reason they won't are the same political pressures that keep them from implementing income tax hikes.

As I explained, there is no real way to jump straight from an income tax to a consumption tax, because of the immediate, drastic economic effects on savings.

Yes, we don't have a national sales tax, but we do have state sales taxes, so it's not as if you're dealing with any more hassle now than before. You're just paying more for consumption, and less out of your income.

As I said, this change should be accompanied with a progressive flat tax, or a drastically simplified incremental tax.

[David S]

My first choice would be to eliminate the personal income tax and relace it with nothing. If you've ever filled out a US income tax you know its  a nuisance. As a replacement for that I'll take a sales tax or a flat tax but not both. If you want both thats your business but I'm not buying.

[○∙◄☻¥tπ[╪AV┼cVê└]

Greenspan is a partisan Republican hack.

[ATFFL]

Greenspan is a partisan Republican hack.

I love when you make funnies.

This is your best yet.