Letters: Don't switch to consumption tax

Regarding "A smarter way to tax" [Editorial, Nov. 16], there are some flaws with a consumption tax and some pie-in-the-sky aspects.

For example, what happens to people who previously saved? We're talking about money they paid taxes on, and they need to spend it. Is that not double taxation? How does that injustice get resolved?

The further I read in the editorial, the more exclusions were mentioned. Why do you think that the current tax code is so big and complicated? It was to make it more fair. Everybody had a wonderful idea as to how to do that. Then we created more people who would help make it fair. They have a name: lobbyists.

How soon do you think this "simpler" tax system would become 1,000 pages? Then 2,000 pages, then 3,000 pages? The result would be another humongous tax code.

And those "nation's finest minds" will be plying their trade.

Jerry Schreibersdorf, Douglaston

Editor's note: The writer is a tax preparer.
 

As you describe it, a consumption tax would tax people based on the difference between what they earned and what they saved. This would hurt the low- to middle-income families and earners, because they don't have any money to save. They spend all their income trying to live.

If all your income is taxed, then these wage earners may pay more in taxes under this system than they do today. They can't save now, and this can't promote savings.

The high-income earners would benefit from this plan, because they have discretionary income to save. High-income earners may spend less to avoid being taxed. That would slow growth and result in less tax revenue. This would not create jobs or tax revenue balance, unless you consider a tilt to the rich a good balance.

Before the tax went into effect, there would be value in taking a few years' worth of spending out of savings now, to pay in cash for future purchases. By doing this, people with cash could save all their future income. The loss in interest will be a lot less than the taxes they would pay on spending. So who avoids taxes with this plan? The rich. This would reduce tax revenues.

James Cronin, Mineola