Saturday, March 19, 2005

A consumption tax that would work in the real world

In the March 21st edition of Fortune, Bruce Bartlett writes in favor of a consumption tax. He points out that President Bush's bipartisan tax-reform commission, which had its first meeting on Feb. 16, focused mainly on taxing consumption instead of income. This is seen as a way of increasing savings and investment in a nation of spenders.

In the article, he mentions that an unheralded economist, David Bradford, is the reason for this new discussion. Bradford, a professor of economics at Princeton since 1966, died Feb. 22 at the age of 66 - he is widely viewed as one of America's best tax economists. He made his greatest contribution to tax policy early in his career as an assistant to Bill Simon, then Treasury Secretary under Gerald Ford.

Simon was one of the first politicians to propose killing the federal tax system as we know it and starting again from scratch. And he assigned Bradford the job of figuring out what it should look like. Bradford delivered his Blueprints for Basic Tax Reform days before the inauguration of Jimmy Carter, who had no desire to pursue Ford administration ideas. In this publication, he outlined the nation's first consumption-tax proposal.


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