Posted: Oct 02, 2005 By: Christopher D Clark

Subject: National Consumption Tax

Comment: The Fairtax bill calling for a national consumption tax is the superior choice to improve the current federal taxation system. The reason is neither equity, nor greater freedom, but efficiency. The cost savings in reducing the size of a bureaucracy as large as the IRS, without reducing its effectiveness(the workload would be much less), are substantial. Minimizing the costs of compliance, both in time and actual dollars spent, tremendously encourages growth. Distortionary investment and labor behaviors will fall. All who fear that the poor will be hurt should recognize that the Billions of dollars gained could in some measure be spent on useful social programs. All other issues can be settled after efficiency is increased. By definition, anything less than efficient is just waste. Waste goes to no one. It is just lost.
The potential problems of a consumption tax include: the loss of the automatic stabilization that a graduated tax provides, the loss of many IRS jobs(only applicable if it's your job), a decrease in the average salary of all accountants and tax attorneys, the farce that employees will receive their entire paycheck(they will just be paid less initially), and the loss of economic data available for research. The largest difficulty in getting this put into law is the decrease in the power of lobbying, as well as political might, as congressmen will not be able to create income tax breaks for their chosen winners, thereby decreasing the value of contributing to their political campaigns.

Please make the correct decision.