"Because the FairTax scheme relies on a consistent level of consumption"
Please give us the link(s) to the exact phrase(s) where you think you read this. Or is this something you just dreamed up especially for this post?
Response: Because the FairTax scheme relies on a consistent level of consumption, I would think the choice for a healthy economy is not either or.
pigdog asks: Please give us the link(s) to the exact phrase(s) where you think you read this. Or is this something you just dreamed up especially for this post?
What I was referring to is the oft repeated claim that the FairTax is a more reliable source of government revenue than the income tax because in good times or bad, spending (consumption) is more consistent (reliable) than income.
Consumption is a more stable source of revenue than income. A recent study shows that for the years 1959 to 1995, the consumption base was less variable than the income tax base. Why? Because during difficult times due to unemployment or an inability to work, there are less wages to be taxed; however, people continue to consume. They use savings and borrow money to buy what they need.
http://www.fairtax.net/faqs.htm#who
What the FairTaxers miss, is that if one's income is reduced, one's taxes are also reduced under the income tax; while the FairTaxers rely on (or at least use as an argument) consumption remaining constant and thus stable tax collection, even if one must borrow or go through savings to continue supplying the government with revenue. One system has the taxpayer handing over a portion of what he actually has and the other paying taxes on what he needs even if he has to borrow to do so.
Without a doubt, others will join you in taking your spending elsewhere. At a 30% federal rate, if we believe the FairTax hype, plus whatever the state and local rates turn out to be, it would be foolish not to.
What steps will government then take to bring retirement money and spending back home?