Mar. 4, 2005 – Federal Reserve Chairman Alan Greenspan entered the debate over a national sales tax yesterday, when he commented that a new consumption tax could bolster the national budget and provide a partial replacement for income taxes.
Greenspan made the remarks at the Presidentâ€™s Advisory Panel on Federal Tax Reform. President Bushâ€™s advisors have advocated a push towards taxing consumption, instead of taxing income.
Critics, including advocates for low-income earners, argue that consumption taxes would disproportionately tax the poor, who spend most of their income on necessities like food and medicine.
Greenspan said policy-makers could create a tax that would exclude products mostly purchased by the poor, but the Bush administration has yet to unveil such a plan.