A Robert J. Samuelson column in the Washington Post about The Future of the Welfare State (registration required) triggered a thought. When Samuelson says:
But Europe relies heavily on a sales tax — the “value-added tax” — that, in theory, falls on consumption and not investment or work effort.
I think, you know, some people want to introduce a national sales tax, or consumption tax, in these United States to replace the income tax. I hadn’t given much thought to the stupidity of the consumption tax, but here’s my epiphany:
A consumption/sales tax rewards people like Scrooge McDuck who throw all their moneys into savings and vaults but don’t purchase things, which keeps the economy going. Of course, when Scrooge McDuck dies, the inheritance tax kicks in and the heirs get less than the sum of Scrooge’s savings, which they can save or spend (with applicable consumption taxation). Holy cow, Taxman!
Perhaps less taxes would spur the economies. But less taxes means less government dole, and how can one get elected with the latter?
