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Wednesday, April 23, 2003

Consumption Tax or Wage Tax?

In a post regarding "Phasing in the Dividend Tax Cut" today over at A Taxing Blog, Victor writes, "...the Bush plan is part of a broader agenda to move us away from an income tax and towards a consumption tax, where all investment income would not be taxed at all. And many smart people do think that moving towards a consumption tax is sensible (or at least inevitable). "

In response, I have reposted below a post from before A Taxing Blog began, questioning whether the Republicans really are headed to a consumption tax, or a wage tax. Please note that I am not a tax policy expert, and I am not questioning what Republicans want to do, but what they will do, if given the opportunity.

Of course, it is also possible that I am misunderstanding things here, and that a wage tax is a form of a consumption tax, since it adds to cost of production. Or is that a "value-added" tax? I am obviously not up to date on the terminology here. My point is that the Republicans will end up placing the tax burden on the working poor, not on "spending" per se.

Note: What I responding to is actually a somewhat minor point in a longer post about the dividend tax cut.

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