Bush administration favors consumption-based tax.(Tax Watch)

Investment News, April, 2005

Byline: Mark Battersby While trying not to compromise the tax reform panel's deliberations, White House economic adviser Kristin J. Forbes disclosed the Bush administration's interest in moving to a more consumption-based tax system. Speaking at an economic policy conference hosted by the National Association for Business Economics in Washington, she said the hybrid federal tax system relies too heavily on the taxation of capital.

"Most of our revenue comes from taxing income and profits,'' she said. "The nature of the current tax system does bias people to consume more because you don't get taxed on your consumption and save less because of the higher tax on income and profits.'' Although the phrase "consumption tax'' conjures up...