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Question asked: Once again, I ask you, how would you tax the citizenry? On their income or their consumption. What do you want to encourage?

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.

You'll notice that over the years of "fair tax debate" [sic] the most important parts of the conversation has not been what was said, but questions posed and points made in nearly every thread that have been avoided like the plague. It's like holding a cross up to Dracula. As they blather and obfuscate and post spammage and hooey from this "source" and that like it's some pronouncement from God's own lips, they purposely avoid the psychology and FUD factor like it's "no big deal".

Using fear and loathing to sell a red herring is a recipe for disaster -- and economic and societal disaster without parallel.

"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. "

You've actually defeated you own point (which you alluded to in a recent post) by showing us that consumption is a more stable tax base than income.

It's hard to understand just why you gather some of the quotes you present to me since some came from or were to others, but I do note that you are one of the status quo supporters who believes that government spending is an investment as you were asked:

"Or are you one of those people who think that gov't spending is an "investment"?
Government spending that creates infrastructure, promotes financial stability and protects people and property is an investment."

That surely indicates you think it is morally wrong for taxpayers to have charge of their own money and have any decision in when or how it should be taxed but that rather government should take in the funds and then allow the taxpayer whatever it decides is proper. You'll find that most FairTax supporters disagree with your view completely.

As for the functioning of the income tax on your income, if your income is reduced and therefore the government's tax take, what do you think the governments tax action would be?? Perhaps just say "... that's ok - I'll just spend less this year and get it back in a couple (or ten years)??? Or would the government be more likely to bump up tax rates and/or enforcement or any of the other "tricks" they have available (such as ramping up inflation) with the status quo.

The answer should be obvious and the taxpayer is far better off (as is the government due to the more stable tax base) by having other resources to draw on if required.

"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."

Indeed that's the case but the big difference is - which you seem to overlook - that if under the income tax your income declines (along with the government's tax revenue) you are also forced to depend upon your own resources but that at least under the FairTax the prebate covers any taxation (or even more than that) on your "needs" so that neither you nor the government suffer drastically and with the tax free provisions of income under the FairTax you'll be much more likely to earn any funds back more quickly.