A Consumption Tax? There's A Better Way To Foster Savings
In your article "A consumption tax: Now, that's tax reform" (Top of the News, Mar. 14), the inherent disparity between the savings rates of the upper 2% and the remaining 98% of the population speaks volumes against the adoption of a consumption tax in place of the personal income tax. While the top 2% can and will shelter much of their income from taxes, the rest of the population spends a much higher proportion of their incomes simply because they have to. They are thus left with much less of an opportunity to avoid taxation by saving and investing.
If the public policy goal is to increase savings, why not simply "tinker" with the taxability of interest income? Rather than taxing all interest income, why not just tax interest income over $5,000? This would promote savings by making a tax-free vehicle for investing available to the majority of the population.
Deer Park, N.Y.