Comparing 1982 (personal savings rate of 11.2% of disposable income and 2004 (personal savings rate of 1.8%)... a decline of 9.4 percentage points
Durable goods consumption rose (mostly automobiles) accounting for 1.5 percentage points.It would appear that the decline in personal savings is LARGELY due to an increase in the consumption of Medical care and an increase in Personal Business Services consumption due to an aging population moving into retirement.Medical Care consumption rose accounting for 6 percentage points.
Personal Business services consumption (banking, brokerage, legal, etc.) rose accounting for 2.3 percentage points.
All other consumption combined FELL by 0.5 percentage points.
Since the population will continue to age, Medical care consumption is likely to continue to increase (regardless of the tax scheme.) As the population ages and moves from building assets to consuming assets, personal business service consumption will increase as a % of income (even though they are not working, they will not close their bank accounts or immediately liquidate their portfolios.
Your implication that our declining savings rage is due to "consumption gone wild" doesn't square with the data. As the population ages, two thing will happen: consumption of medical care will increase, and, most importantly, overall consumption as a % of income will increase as more and more of the population stops working, or trades high income jobs for low-to modest paying supplemental jobs to supplement retirement income. They will, however continue to consume. As they move to more negative cash flow positions, the overall savings rate of the country will appear to decline.
That is not a statement of "excessive consumption" or insufficient savings, it's an expected result of an aging population.
The Armey/Shelby Flat Tax, does not tax the earnings on those investment vehicles as such gains are all exempted.
Neither does the FairTax.
Ahh, but the FairTax visibly taxes consumption providing the demonstrated disincentives to spending and incentive to save/invest above, where the Armey/Shelby Flat Tax does not visibly tax consumption generating opposite results on investment and consumption.
The consequence according to Jorgenson...
No, that would be the consequence according to ancient_geezer.
Jorgenson 1997: "2.Taxation of consumption would induce a radical shift in the composition of economic activity-away from consumption toward investment."
Your implication that our declining savings rage is due to "consumption gone wild" doesn't square with the data.
"Too much consum'n go'n on" it looks to me and squares with the data fine: