America Should Move to a Consumption Tax, Prof. Ted Rueter Argues
August 12, 2005
August 12, 2005, Greencastle, Ind. - "A growing number of economists and politicians are concluding that the United States should replace the income tax with a tax on consumption," writes Ted Rueter in today's edition of Indiana's Bloomington Herald-Times. The assistant professor of political science at DePauw agrees that a consumption tax should be implemented. "At the Constitution Convention in in Philadelphia in 1787, the Founding Fathers made no provision for the federal government to tax income. Maybe they knew what they were doing."
Dr. Rueter lists several advantages that he perceives in a consumption tax over the current income tax. Among them (in his words):
- Taxpayers would have some ability to control their tax liability, based on their consumer spending.
- A consumption tax rewards savings, thus increasing thrift and investment.
- The costs of tax compliance are greatly reduced. At present, federal income taxpayers spend $225 billion and 5.4 billion hours per year filling out federal income tax forms. With a consumption tax, these figures would be zero.
- Reduced special interest favoritism. The federal income tax code is riddled with favors, loopholes, and sweetheart deals for special interest groups, all of whom have high-powered, high-priced Washington lobbyists. A uniform consumption tax would eliminate this public ripoff.
- U.S. manufacturers would benefit. Foreign companies would be forced to compete on even terms with U.S. companies.
The professor provides history on the subject, noting, "The concept of taxing consumption rather than income has been discussed for nearly 500 years. In 1651, Thomas Hobbes wrote in The Leviathan that taxing what citizens consume is more just than taxing that they earn. Consumption, Hobbes thought, represented what people take out of society, while earnings demonstrate what they contributed. Around the same time, Sir William Petty argued for taxing consumption on the grounds that the goods and services that individuals consume are a better measure of their well-being. He wrote in 1662, 'Every man should pay according to what he actually enjoyeth,' and taxes should be low on those 'who please to be content with natural necessities.' In the 18th century, Scottist philosopher David Hume asserted that a principal benefit of consumption taxes is that they are somewhat voluntary, because consumers can decide whether to consume the taxed commodity. This argument was endorsed by Alexander Hamilton in Federalist No. 51."
Read the complete essay at College News.org.Back