The downside is simple. Lots of "disposable spending" type of businesses would lose enough business that they would go under.
There would most definitely be a snowball effect. I agree with you on durable goods? Would you eat at restaurants as much or rent movies or go to theaters as much? Would you drive as much? Would gas mileage matter more? Maybe more people would use motorcycles to save on gas.
The point is that you would now be able to really control how much tax you pay by how much discressionary spending you cut out.
And a major part of our economy is discresionary spending.
I can't see my spending habits changing much. What I do possibly see changing is me opening a side business. Can't do that right now as I either open my own business and operate at margin or a loss, or I work for someone else and get teh bills paid.
A major part of our economy is not sustainable without new wealth being generated. The current system penalizes new wealth. The NRST makes it more possible.
I think I'll stick with "the New Hope" embodied by the NRST than the Devil we already know in the over abused IRS.
Look at the whole picture:
Presently, the cost of imbedded taxes raises prices 20 to 25%.
Presently, the feds take 20 to 30% of your INCOME.
The FairTax will only be 30% of what you SPEND and prices will be lower because that imbedded taxation cost is GONE.
You will have a lot more to spend. Spending will not go down.
You are being illogical or dishonest to say otherwise.
"Neither. The consumer has 30% more spending money in his pocket.
Let me see ... more money to spend ... demand increases ... supply remains constant ... prices therefore .... DROP????
In your dreams."
Robert Paulsen Post #254
"The point is that you would now be able to really control how much tax you pay by how much discressionary spending you cut out.
And a major part of our economy is discresionary spending."
Let's see now, Mr. Paulsen is worried about demand being so great that (pre-tax) prices won't decline in spite of major cost savings on the part of businesses. Now RobRoy is concerned that demand will be so weak that it will trigger a major economic downturn.
Is it possible that the economists who have studied the FairTax are correct in their view that demand will be somewhere between these two extremes and that the economy will do extremely well?