As lower and middle income Americans struggle to keep up with rising consumer standards, personal saving rates are falling and consumer debt is rising. Many Americans are caught up in a cycle of work and spend, putting in extra hours on the job to afford their consumer spending habits. The vast national wealth now going to personal consumption reduces the resources that our society has available to meet other needs. A new universal consumption tax could be structured in a progressive fashion. Such a tax could deter excessive consumer spending, increase the national savings rates, and generate new revenues for public and private investment.
Most sales taxes are regressive, disproportionately falling on lower income people.
Sales taxes are not the best way to curb excessive consumer spending. The best solution to excessive consumerism may lie in changed personal behavior. The Internet is dramatically affecting social relations among Americans. Heavy use of the web is both bringing Americans closer together and pushing them further apart. While virtual communities have created new forums for people to connect with each other around common interests and causes, high levels of Internet use have also been found to increase social isolation.