[ancient_geezer]

Then those studies are irrelevant.

The show us a relavent modelling that demonstrates your conjecture.

Just for the record which "studies" are you referring to?

Jorgenson, Wilcoxen 1998 revised 1999 works well. A comparative study between the Armey/Shelby flat tax & income tax baseline.

If you have a dynamic study that that deals with a graduated income tax system that providing a similar comparative view, or one of more recent origin, it would be good to see it. I don't know any off hand but I open to looking at whatever you might come up with.

And what, exactly, is the "disincentive for consumption" under the FairTax?

You might try an open and visible tax on items of consumption for one. Works great to provide that extra motivation to chose between consumption today or socking earnings away against the future after they grow abit.

 

Now you're into your own personal conjecture. You seem to have a penchant for relying on studies that don't come close to modeling the assertions you make.

http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf

• " Figure 6 compares the impacts of the two tax reform proposals on consumption. The impact of the Flat Tax in 1996 is to increase consumption by 3.5 percent, relative to the Base Case. This impact gradually diminishes over time, falling to 1.3 percent by 2020. While it may seem paradoxical that consumption increases with a rise in the consumption tax, the marginal tax rate for low-income taxpayers is reduced to zero, stimulating consumption."

• " Figure 7 compares the impact of the two tax reform proposals on investment. The impact of the Flat Tax in 1996 is to depress investment by 8.6 percent, relative to the Base Case. Investment recovers over time, eventually reaching a level that is only 1.7 percent below the Base Case in the year 2020. "

[Dimples]

Jorgenson ... again??? Don't you have anything more recent? That's a little dated isn't it? (Wow, I'm beginning to sound like YOU!) As I said before, don't complain, as you often do, when others use such "dated" material.

More to the point, did I say anything about progressive Flat Tax proposal?

No. I did not. As I said, those studies are irrelevant; they don't model what I suggested at all. Your insistance that they somehow hold sway on completely different implementation schemes underscores my claim that you can't seem to compare apples to apples. You'll use any old (literally) study that supports your assertions, even if that study has nothing to do with the conversation.

You might try an open and visible tax on items of consumption for one. Works great to provide that extra motivation to chose between consumption today or socking earnings away against the future after they grow abit.

More conjecture unsupported by your source ... where, exactly, does Jorgenson claim this? (Hint: He doesn't!)

There is a HUGE disincentive to consumption in the ST modeled by Jorgenson: it raises the marginal tax rate on low income families!

Under Armey-Shelby, consumption rises because the PROGRESSIVITY of the tax makes the marginal tax rate for low income families zero (it has nothing to do with the tax on personal savings and investment ... low income families tend not to have any of that ... or the visibility of the tax. You'll note, but I suspect you will ignore, the fact that that same study did not model the ST with any progressivity; so the marginal rate for low income families under the ST is 15.7% to 21.4% over time ... and consumption falls. Gee, do ya think that raising the marginal tax rate on low income families might eat into their consumption a bit??? just maybe??? What do you think might happen to consumption in a progressive ST (one that lowers the marginal tax rate on low income families to zero ... just like Armey-Shelby, just like the FairTax)? (Hint: It will rise!)

And, if your assertion is true, that purchasing power is increased under the FairTax (which I do not believe happens under the FairTax implementation) then the incentive to consume is increased even more! (But since your study about a significantly different model doesn't say that, you won't even consider that possiblity.)

To suggest that the incentive to invest overwhelms the desire to consume flies in the face of Modigliani's work. Jorgenson made no such claim. You've gleaned that characteristic of the FairTax out of thin air.

If you're going to rely on studies, at least represent them honestly.

Then you trot out the other Jorgenson paper - Baker (don't you have anything else???) - and highlight the performance predictions for a specific Flat Tax. Now you're just being silly. Did I say anything about a Flat Tax???

No! I did not. But you can't seem to accept that. Either you're just being absurd to be argumentative, or you have great difficulty with comparative analysis.