Bush panel vows revamp of tax code: Consumption Tax

[nodictators]

Fri Apr 15, 9:40 AM ET

By William Neikirk Tribune senior correspondent

---snip---
Former Sen. John Breaux (D-La.), co-chairman of the panel, said Thursday that the group is "absolutely" intent on recommending a thorough restructuring of the income tax system rather than a modest simplification or tinkering around the edges.
---snip---
The advisory panel issued a strong statement Wednesday calling the current tax code "unstable and unpredictable" and in a "dismal condition," harming businesses, individuals and the U.S. economy.

"Our tax laws have been compared to an overbuilt and dilapidated house with conflicting architectural styles and a crumbling foundation, a sick patient who is about to expire, and a factory that has been littered with so much garbage that it can no longer operate productively," the panel said.

http://news.yahoo.com/news?tmpl=story&e=5&u=/chitribts/20050415/ts_chicagotrib/bushpanelvowsrevampoftaxcode&sid=84439559

Here is an example of how regressive the consumption tax really is:

Suppose someone makes $1 million per year. Under the current tax code that person would probably have a Federal tax of $250,000 to $300,000. (Bush supposedly had a tax of about $200,000 on an income of about $700,000)

Assuming a consumption tax rate of 30% and $300,000 in consumer spending, this million-dollar earner would have only $90,000 in Federal tax, a huge savings.

Now, consider a senior citizen on Social Security. An average SS retiree probably would have little or no Federal taxes under the current system.

Average SS retirees probably spend most or all of their SS benefits. Some may have savings, and have more spending than their SS benefit. So, the retiree would have a new, huge 30% tax on their SS benefits.

Other groups that would be hammered to hell by the consumption tax are low-income people, families with many children, an unemployed people.

Breaux is another Zellout Dem!

[Jamison]

1. I swear these DINOs and the GOP will stop at nothing

to save the rich big bucks, and to bend over the middle class, working class, and poor.

[w13rd0]

2. I had to explain...

...to a friend of mine just how regressive this proposal was. He was under the impression that somehow, this would be of benefit to him. A flat consumption tax would amount be a crushing blow to the poor and middle class. It would heavily penalize those who don't "live off their savings and investments". Completely unacceptable.

[Warpy]

3. If they pass this dog, there will be a Depression

and it'll make the last one look like a happy time at a picnic.

People will simply stop spending, period. The consumer economy (two thirds of the national economy) is already in trouble. This will pretty much shut it down completely.

So you'll have the rich curtailing luxury purchases at the top and the rest of us trying to make do with broken washing mashines and the like at the bottom.

[beyurslf]

4. I don't think this has any chance of passing. It would crush the

economy and almost no one benefits from it. Sure, Bush's tax cut mostly benefited the super rich, but most people did get a little something. With this proposal, they will see their tax bills soar with nothing to show for it.

[cestpaspossible]

5. Hopefully, the GOP will push this hard.

Because it is a winning issue for us.