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NRF Urges Tax Reform Panel to Reject Consumption Tax

WASHINGTON, D.C. -- The National Retail Federation (NRF) urged the President's Advisory Panel on Federal Tax Reform Wednesday to reject a proposed national retail sales tax and other tax proposals.

“Our nation's federal tax system needs work, but a consumption tax is not the answer,” said Rachelle Bernstein, NRF vice president and tax counsel. “Consumer spending has been the backbone of the U.S. economy in recent years, and huge new consumption taxes would send a message to consumers to stop spending. Americans whose jobs depend on consumer spending can't afford to take that risk.”

The Federal Tax Reform panel is holding a hearing on specific proposals for reforming the nation's federal tax system, including several consumption tax proposals as well as proposals that revise the existing tax code.

The NRF is particularly concerned about proposal H.R. 25, the Fair Tax Act, which would replace the current federal tax system with a 30-percent national sales tax in addition to existing state and local taxes. A 2000 NRF study found a national sales tax such as the Fair Tax Act would cause a three-year decline in the economy, a four-year decline in employment and an eight-year decline in consumer spending.

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