|
Sales
tax helps to reduce over-consumption
Alan
Greenspan, chairman of the Federal Reserve,
recently praised the idea of a new national
tax on consumption. Such a tax may play
a central role in Bush's plan to overhaul
the tax system.
It
is unclear whether or not a new national
sales tax is envisioned to replace the current
income tax system in whole or in part.
Many
advocates of the consumption tax have been
calling for an end to the Internal Revenue
Service and a simplification of the tax
code.
Proponents
of the tax say it would encourage more Americans
to save money at a time when per-capita
debt levels are at an all-time high. More
savings and investment would spur economic
growth and keep interest rates from spiraling
out of control. Such a tax could also address
the problem of the enormous trade deficit
that threatens to sink the American economy.
One
of the biggest problems facing the nation
today is that Americans are spending money
they don't have to buy foreign manufactured
goods. By investing in American treasury
bonds and securities, countries such as
Japan and China have been paying U.S. consumers
to purchase their wares. Japan alone holds
more than $700 billion in U.S. treasury
bonds.
Perhaps
a national tax on consumption could curb
spending that will be detrimental to the
economy in the long term.
Unfortunately,
a national sales tax is highly regressive.
The
poor spend a far greater percentage of their
income on basic necessities than the rich.
Furthermore, under the current system lower-income
Americans don't pay federal income taxes.
A national sales tax on all goods might
burden those who can afford to pay.
The
current tax system was put in place so the
government could collect revenue from those
who could most afford to pay for the services
that it provides. Many of the government's
primary functions also serve to benefit
the rich.
The
government and military have the Herculean
task of ensuring a favorable business climate
worldwide for American investors. Such an
undertaking doesn't come cheap, and those
who stand to benefit the most should be
the ones to shoulder the financial burden.
Perhaps
a compromise could be reached on the implementation
of a national sales tax. It is imperative
that we seek ways to restrain our voracious
appetite for material goods. If we refuse
to discipline ourselves, others will do
it for us. The announcement by South Korea
that it "would expand investments into
non-government bonds," was all it took
for the dollar to drop by 1.5 percent in
a single day. Imagine the damage Japan could
do to the American economy with a similar
pronouncement.
One
day in the not-so-distant future, foreign
investors will wake up and realize they
don't like subsidizing American largesse.
They may realize the United States is using
a disproportionate amount of the world's
non-renewable resources, such as oil. Such
over-consumption leaves everyone else with
a smaller share of the pie.
We
have the opportunity to restrain ourselves
with a national tax on consumption. Failing
to control our appetite will lead to serious
problems down the road.
Sterling
Harris is a history major at CSULB.
|
