4.As a consequence of the elimination of taxes on capital income, individuals would sharply curtail consumption of both goods and leisure.So then I was right: eliminating taxes on personal savings and investing WOULD increase the savings rate! Just don't complain about the date of the study; if it's good enough for your arguments ... ;-)
2. For some unknown reason you've chosen to take my rhetorical suggestion to phil_will1 out of context and hammer on it in an even more irrelevant context: that of a Flat Tax. I never said ANYTHING about a Flat Tax. Why do you keep harping on Flat Tax schemes?
3. You always complain about "dated" studies when someone else uses them but you use them yourself almost exclusively? Why do you keep complaining about it?
Absolutely where the problem of negative savings and investment is most critical and where the greatest dependancy on government entitlement programs such as Social Security and Medicare lay. The very areas where government spending is highest and most critical, driving towards collapse of the entire system...
And the FairTax does nothing to decrease dependency on government, nothing to reform Social Security or Medicare, and nothing to reduce spending in this "highest and most critical" area.
it raises the marginal tax rate on low income families!
As well as everyone else.
But as Jorgenson said, its the marginal tax rate on low income families that is to blame raising or lowering consumption. You just choose to ignore that fact when it's inconvenient.
However adding a sales tax rebate to the mix changes the distributive effects significantly providing substantantive relief to those same families yet retaining that necessary highly visible disincentive to spend all that one earns rather than save and invest for future benefit.
So which is it? will they spend the demogrant or save the demogrant? You sound confused. Jorgenson claims they will spend the demogrant. Again, he makes no connection between visibility of the tax and consumption.
The rest of your gobbledygook about Social Security reform and socialistic spending is yet another of-topic rant having nothing to do with the tax scheme, my original comments, or the phase of the moon. Try to stay on topic, please.
LOL, keep telling yourself that [that consumption rises because the PROGRESSIVITY of the tax].
Jorgenson said that. I just cut and pasted his remarks to remind you. What's sad about your debate technique is that when presented with a direct quote from one of YOUR sources that contradicts your assertions, you pretend it either doesn't exist or that it was made up. You did that when I caught you misrepreseting Payne, and you're doing here with Jorgenson. Again, if you're going to use a study, then represent it honestly.
So then I was right: eliminating taxes on personal savings and investing WOULD increase the savings rate! Just don't complain about the date of the study; if it's good enough for your arguments ... ;-)
Ahh, you missed the other half that is necessary I noticed, for the equivalent Flat Tax study shows the merely not taxing capital income is insufficient. It take both not taxing capital income and taxing consumption to obtain the overcome the propensity to spend ones income regardless of how it may be derived.
As is demonstrable in comparing the result of using the revenue neutral version of the Armey/Shelby Flat Tax:
Jorgenson '98 Flat Tax study:
http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf
With a revenue neutral FairTax implementation:
Jorgenson '97 FairTax study for AFFT
. I never said ANYTHING about a Flat Tax. Why do you keep harping on Flat Tax schemes?
The single rate ArmeyShelby Flat Tax system is comparable a single rate retail sales tax with progressivity. Equivalence through the relation of
consumption = income - investment.
The FairTax system visibly and directly taxes consumption on the right hand side of the relation.
The FlatTax system indirectly taxes consumption by taxing labor income excluding income from investment and savings.
The studies exist for both using the same algorithms and models hence provide a unique capactity to isolate the effect of tax consumption visibly through retail sales vs taxing consumption indirectly through non-investment income.
As can be observed above where progressivity is present in both systems there remains the effects on investment and consumption are in opposition to each other. The difference clearly demonstrated as the effect Jorgenson's demonstration that :
"Taxation of consumption would induce a radical shift in the composition of economic activity-away from consumption toward investment."
For the FairTax case taxing consumption directly, and for the FlatTax case which taxes consumption indirectly as would be the case for your speculations with phil_will1:
"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."
Obviously more is in operation than merely progressivity as the Armey/Shelby Flat Tax is just as progressive as the FairTax system.
LOL, keep telling yourself that [that consumption rises because the PROGRESSIVITY of the tax].
Jorgenson said that. I just cut and pasted his remarks to remind you.
Obviously missing a lot of context and background regarding the statement.
You did that when I caught you misrepreseting Payne
Misrepresenting Payne? hardly. I would suggest you take another look, as Payne clearly compiles the most comprehensive measures of total tax-related overhead costs on the economy that exist. Far beyond the mere accounting compliance costs (the least of the impacts on price) that most restrict themselves to.
and you're doing here with Jorgenson. Again, if you're going to use a study, then represent it honestly.
Interesting isn't it, how it all breaks out when results of equivalent tax systems can be so divergent on the mere mode on which the tax is actually collected. Flat Tax from the indirect income side, FairTax from the direct and visible retail consumption side.
Both single rate, both progressive, but bottom line directly opposite in effect as regards consumption and investment arising out of the visibility of the legal incidence of the tax, what it is visibly and psychologically linked to in the mind of the consumer/income earner pay the tax in either situation.
The only persons here mis-representing results and warping conclusions in this matter would appear to be on your side of debate.