For the second time in 10 days, Federal Reserve Chairman Alan Greenspan was complimentary of consumption taxes. He spoke last week on improving the nation's savings rate. During his testimony at the President's Advisory Panel on Tax Reform on March 3, 2005, Chairman Greenspan pointed out the merits of a consumption tax - such as the FairTax in spurring economic growth.
"This is great news for America," stated Tom Wright, executive director of FairTax.org. "Though Greenspan did not say the magic words 'FairTax,' we are America's leading consumption tax by both Wall Street Journal and CNN recent polls. The FairTax meets every criteria and solves most every problem mentioned in his testimony: Fairness, simplicity, predictability, and ends all taxation on capital - the driver of economic expansion. We look forward to working with the chairman on the transition from income to consumption taxation."
"We also believe in the positive impact of a progressive national retail sales tax on the economic well being of this country," continued Wright.
"Dr. Dale Jorgenson, former chairman of Harvard University's economics department, forecast a 10.5 percent GDP growth in the first year after enactment. Over the last decade FairTax.org has spent more than $22 million on research with other top institutions, which delivered similar expansion predictions. This has enormous implications for the federal budget deficit and the job creation picture, among others."
"Former Secretary of the Treasury Jim Baker also recommended the investigation of a consumption tax at Thursday's hearing," Tom Wright said. "For me, the most telling part of the Honorable Jim Baker's
testimony was in the Q&A when he reiterated his recommendation on a "move" to consumption taxation, a switch, not an add-on - a question that keeps coming from the president's panel."
Former Secretary of the Treasury Baker also stated that the sweeping reforms of which he was an integral part in 1986 were "transitory." As a solution Mr. Wright said, "The FairTax, as a sales tax collected under the bright lights of the retail counter, is inoculated against lobbying. It brings transparency and simplicity to the tax system even an 11-year-old can understand. Anything that simple is not immune to special interests, but it sure makes such back room deals much harder."
"The suggestion by some to combine different forms of taxation such as the French value-added tax (VAT) would be in direct violation to Chairman Greenspan's advice to make all things visible," added Wright. "VAT taxes, such as those France forces on new members entering the European Union, are levied and hidden throughout the manufacturing process, building a playground for special interests similar to that of our income tax. Ultimately the FairTax is the only replacement for our income and Social Security tax systems that is open, accountable, simple to understand, and fair to all Americans."
What is the FairTax plan?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax, a rebate to ensure no American pays federal taxes up to the poverty level, dollar-for-dollar revenue neutrality, and the repeal of the 16th Amendment. This non-partisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate,
capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes with one simple, visible, federal retail sales tax - collected by existing state sales tax authorities.
The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. So it is also cost neutral the final cost for goods and services changes little under the FairTax. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
What is Americans For Fair Taxation (FairTax.org)?
FairTax.org is a non-profit, non-partisan, grassroots organization dedicated to replacing the current tax system. The organization has hundreds of thousands of members and volunteers nationwide. Its plan supports sound economic research, education of citizens and community leaders, and grassroots mobilization efforts. For more information visit the web page: www.fairtax.org or telephone 1-800-FAIRTAX.