Sales tax unfair

Dear Editor,

In his address on the third of March, Alan Greenspan proposed the implementation of a national sales tax.

Such a tax is identified by different names: a Value Added Tax. consumption tax, or a flat tax.

Let's take a look at the effect of implementing such a tax. Greenspan did not suggest a rate, but for purposes of discussion, we will consider a 4 percent rate.

First we need to remember that this tax would be added to all sales taxes presently levied by the state, counties, and cities.

For our discussion consider two families - one with a family income of $40,000 per year and another that has a family income of $400,000. It is likely that the family with an income of $40,000 will spend almost all of its income with little money left over for savings and investment. That family's rate of taxation is nearly 4 percent.

Now look at the family with an income of $400,000 per year. Much of that family's income will be saved or invested and perhaps only $100,000 will be spent at retail and taxed. The effective rate of taxation for that family is 1 percent.

Does that seem fair?

Ralph Ekwall

Omaha