Letters: Consumption tax's pros and cons

I wholeheartedly agree with your editorial on elimination of the current income tax code and the adoption of a consumption tax ["A smarter way to tax," Nov. 16].

However, there is a further consideration: There should be a recognition of the variance in the cost of living in various parts of the country. We who live on Long Island, or in the metropolitan area, are unfairly penalized under the current tax system when you recognize that the cost of living is much higher, compared to certain areas in the South and Midwest.

Unfortunately, as your editorial suggested, adoption of a consumption tax is not on our government's agenda.

Andrew Governali, Flushing
 

Your editorial served its purpose as a mind tickler. If it were to come to pass as written, I would only have to worry henceforth about the death part of death and taxes. As a retiree, I no longer have any earned income and the suggested equation of subtracting savings from income would always result in a negative number.

However, I have a suspicion that the federal government and the Internal Revenue Service would not want me to reach paradise with a buck in my pocket. A more realistic scenario might go as follows:

Income probably would be familiarly described as the total of Social Security, pension payments, IRA payments not previously taxed, dividends, capital gains less capital losses, plus anything else they add on. This in turn should be reduced by municipal taxes, school taxes, state taxes, tax free municipal bonds, sales taxes, gas taxes, other petty taxes, medical bills, donations and gifts -- unless, of course, all other tax entities would somehow receive a portion of my new taxes from the new IRS.

I now must subtract what was saved during the year, and that really bothers me since just about everything I have is already in savings or earned before retirement, and I include Social Security in that number. My savings are a little less as each year passes, which boils down to an annual reduction in personal net worth or negative savings. By the way, the true measure of savings is a year-to-year comparison of net worth, and that computation can be difficult if including your home in the equation.

The formula in the editorial says income less savings would be what I spent, and the basis for a levy called the consumption tax. Note that I never made a purchase and spent nothing. This method pretty much ensures that no one will ever leave an inheritance, and looks like the system we now have, but even more complicated and unfair. Also it sure would not favor American business, since foreign purchases give a bigger bang for the buck.

You are correct in looking for a truly great tax system, but this ain't it.

Robert Schweitzer, Mount Sinai
 

I am enjoying the "Balancing Act" series, but the "smarter tax" proposal seems entirely tone deaf to the issue of income inequality. How would someone like Warren Buffet pay his fair share of taxes? There is no way that billionaires or multimillionaires can spend a significant portion of their income in any given year.

More likely, this tax policy would help accelerate the trend toward amassing enormous wealth and the outlandish power that goes with it. For example, by owning larger shares of major corporations, they could avoid having to pay consumption taxes on their political activities by directing their corporations to pay for campaign advertising rather than paying out of their own pockets.

Nor do I see how this would reduce tax avoidance. They wouldn't have to hide money in the Cayman Islands; they'd merely invest in real or bogus companies. This would also certainly benefit the rich.

Phil Heckler, Hicksville
 

Your well-intended editorial missed the mark by at least a mile. When it comes to taxes, the smartest way to fix our enormous deficit problem -- and at the same time minimize the inadequacy and all the cheating, complexity and unfairness in the existing system -- is not a consumption tax or a value-added tax or a national sales tax or a flat tax. It is a financial transaction sales tax.

Few in the financial industry or wealthy progressive elites are willing to bring this to the attention of ordinary taxpayers. It would force our capitalist economic system to assume its social responsibility.

Leo Montagna, Northport