I admit that I find the idea of a consumption tax appealing -- a progressive consumption tax, that is. It would tend to promote more responsible spending and saving.
Robert Reich, who doesn't embrace it, does see some merit. He writes in American Prospect:
In some ways a progressive consumption tax like this would be fairer than a progressive income tax, because you'd pay taxes on the lifestyle you choose. High livers and conspicuous consumers would pay at a higher rate than their more frugal and modest neighbors.
A progressive consumption tax is better than a flat consumption tax. But neither gets at the problem of low national savings.
Reich likes another way of encouraging saving:
If most peoples' wages are going nowhere while their bills are rising, they're going to spend everything they earn. They won't save a thing. The answer to America's savings crisis isn't to tinker with the tax code. It's to boost wages.
I wonder if both a significant boost in wages and a progressive consumption tax would be a good idea?
