Word: ullman
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Dates: during 1970-1979
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...this proposal come from two ordinary legislators, there'd be nothing to worry about. But Long and Ullman control the most important committees in Congress. If they succeed in pushing their VAT through Congress, Americans will pay a regressive "hidden sales tax" which forces lower and middle income people to contribute far more than their share to a government dominated by the interests of Big Business...
...POLITICIANS, the VAT has one fabulous advantage over a sales tax. It's hidden. Though Long and Ullman both admit that its costs will be passed onto consumers, the VAT will not look like a surcharge on sales. Instead it will be incorporated in the list prices of all goods. Consequently, most consumers who spend $50 on a case of wine will have no idea that their purchase is really worth only $45 but that the government tax has upped production and distribution costs...
...regressive nature of this tax. Long actually described the VAT as "somewhat like a hidden sales tax." By taxing consumption, the VAT insures that government will take larger chunks out of the earnings of lower and middle class citizens than out of the incomes of the rich. Representative Ullman tries to mitigate this inequity by taxing necessities such as food, housing and clothing at a rate of only 5 per cent. Yet this still raises the price of necessities for the poor, and it certainly doesn't permit the VAT to escape condemnation as a wholly regressive form of taxation...
Ignoring these defects, Long and Ullman argue that the VAT could break America's inflationary spiral by providing the necessary incentives to boost productivity. Americans save a smaller portion of their incomes than citizens of any other western nation. With savings, so low, banks and business have limited funds to invest in expanding capital to spur productivity. The solution to this problem--for Senator Long and Representative Ullman--lies in a tax on consumption. They even propose that this consumption tax--the VAT--partially replaces the corporate profits tax to free still more money for investment. Evidently, Long and Ullman...
...LONG AND ULLMAN correctly calculate that an attack on our falling rate of productivity strikes at the core of America's economic woes. Yet the VAT leads this attack in a painfully misdirected way. There's no reason why the incentives for savings must come from a regressive consumption tax. As long as federal regulations limit banks' interest rates on savings accounts to 5.75% while inflation runs well over double that rate, it will make no sense for consumers to save large parts of their incomes. If the government wants Americans to save money, it must eliminate these interest ceilings...