Consumption Taxes Versus Income Taxes for Deficit Reduction and Tax Restructuring

The low level of national saving is the greatest single long-run problem facing the U.S. economy. On the basis of the national accounts definitions of income, consumption, and saving (upon which I tend to rely, although I am aware of their shortcomings), U.S. saving averaged roughly 3.5 percent of gross national product (GNP) in the last half of the 1980s, down from the 7 to 8 percent of GNP level that prevailed between 1950 and 1980.