Federal Reserve Chairman Alan Greenspan weighed in on tax reform yesterday, endorsing a move toward a consumption tax, while cautioning against rapid, wholesale change.
“Many economists believe that a consumption tax would be best from the perspective of promoting economic growth – particularly if one were designing a system from scratch – because a consumption tax is likely to favor saving and capital formation,” Mr. Greenspan said.
That should provide a boost to the Fair Tax bill introduced and championed by Georgia Congressman John Linder, a member of the House Ways and Means Committee. Congressman Linder (R-GA), reintroduced his personal consumption tax proposal, H.R. 25, also known as the “FairTax.” on the first day of the 109th Congress.
There are several Republican lawmakers who recognize that tax reform and social security reform need to be considered together. A total tax overhaul will take enormous political effort, but Linder sees good momentum in Congress. It’s time to get behind this commonsensical tax bill that lives up to its name—“fair tax.”