Fair Tax

[SampaGuy]

It's huge actually. Psychologically speaking, 5% we are at right now is big, but its enough that the government wants to spend a trillion to get people spending again (and NOT saving this much).

Thats true.

Even with 10% cut in consumption you are getting 25.875 on T (a total change of ~5).

A total change of ~5 is equal to ~20% less tax revenue coming in. So you would have to change the fair tax rate to ~27.5% instead of 23% to get the same tax revenue, assuming C and S stay the same with this new tax rate (which they wouldn't).

You can't invest (i.e. "save) more? Psychologically I agree the tax is different. But I disagree that when taxes are changed your behavior doesn't change. Granted there is little empirical evidence for this because the changes are so minute that it wouldn't be changing your overall income level by any drastic amount.

I could save more as it is, but the fair tax would be a huge incentive to do it, IMO.

A 10 year depression in Japan couldn't change their fundamentals of their economy. What do you base the US changing into a saving heavy economy on?

I base it on that huge sales tax scaring the life out of people, psychologically.


I don't think the analogy with Japan is good in this case because it is the opposite situation, which is very different. Like, it's a lot harder to get a conservative person to do something very risky than to get a risk-taker to act more conservatively, if that makes any sense. But you might be right, Americans do spend more when they get raises.