Instituting a flat tax benefits you

You're not taking into account the lowering of prices before any sales tax is applied. Prices will decline and then be put back to about where they now are - but the tax will now be paid and you will have more money as takehome pay AND the prebate.

You will clearly be better off financially; purchasing power will increase and the economy will go in the opposite direction from what you are supposing. Spend some time on the FairTax website and learn of some of the beneficial effects of the FairTax.

You're the guy who thought everyone should save them "just in case".

Prices will go down, looey (as you know but don't like to admit) but the amount of tax paid will be plainly obvious to all - and listed on the receipt.

It doesn't matter if you know how much you paid in sales tax last year since federal taxes aren't based on that. I suspect those curious enough to know once the FairTax passes may very well save their receipts to find out that very thing.

Take your meds, looey - you're babbling again.

There are more than 75 economists who disagree with your viewpoint and they told the President and Congress so:

http://www.fairtax.org/pdfs/Open_Letter_President.pdf

You really should educate yourself by reviewing the huge amount of economic information on the FiarTax website - or would you really rather not know?

See #279.

SEC. 304. ALL IRS BUILDINGS TO BE BLOWN UP.

That's it? We don't get to eviscerate the employees? Why am I bothering, then?

Thass funnee!!

Louie said:

The post? How about all the posts you've posted with your underhanded unfounded accusations, moron?

How about three cheers for the prize for one of the worst posters on Free Republic in years. Why do I say that? Because little louie is so insecure he can't post ANYTHING without insulting the person he is addressing. Why? Because his arguments are nothing more than the minutiae (previously noted by another poster) and bear the signature of desperation. Whoever said that louie sells tax kits for a living must be on the right track. I used to think he was a barber but I have come to discount that. I never knew an insulting barber.

Note in the post above that louie harps on Pricipled's "underhanded,unfounded accusations", yet offers nothing to dispute other than to call his opponent a moron. Talking to louie is like talking to a wall in a horse barn. The stench is overpowering and the replies are mute.

I guess it takes a simple mind to grasp the beauty of the NRST.

Your problem is you are looking to deep into something the is plainly stated and you expect the worst from it.

Note in the post above that louie harps on Pricipled's "underhanded,unfounded accusations", yet offers nothing to dispute

Uh, "unfounded accusations" IS a dispute...

Were you saying something about not posting without insulting the poster?

Naw, looey ... it's just an unfounded accusation.

Naw, looey ... it's just an unfounded accusation.

Naw, schweinhund... it's your total lack of ...everything.

From what I've read, it does raise prices, considerably. The more I read, the more I hate the idea.

LINK

From what I've read, it does raise prices, considerably. The more I read, the more I hate the idea.

What they aren't telling you is that the only way prices can drop significantly is if nominal wages also drop to point where employees are taking home the same as they were under the income tax. Even the authors of the FairTax agree with this.

Statement of Laurence J. Kotlikoff,

Professor of Economics, Boston University, and Research Associate, National Bureau of Economic Research
Testimony Before the House Committee on Ways and Means - Hearing on Fundamental Tax Reform
April 11, 2000
This sentence and the one preceding it assume the price level will rise with the adoption of the Fair Tax. If the Federal Reserve used its monetary policy to maintain the consumer price level, the adoption of the Fair Tax would entail a decline in the level of producer prices and, thus, the nominal wages and capital income received by productive factors.

Response to William Gale

by Dan Mastromarco and David Burton
[authors of the FairTax]
Memorandum, March 16, 1998
Federal income and payroll taxes either are or are not incorporated into the prices of goods and services. If they are embedded in prices, their removal will reduce prices. If they are not, then their removal will not reduce prices but instead returns to labor and capital will go up. If returns to labor go up, people will see their after-tax wages increase and asset values will increase since the present discounted value of the new, higher returns will be higher.
The replacement sales tax could be incident on the factors of production or it could be incident on consumers through higher prices. It cannot be both. If it is incident on the factors of production, then wages and the return to capital will fall but sales tax inclusive prices will not be any higher, on average, than they are today. If the sales tax is fully incident on consumers, then prices will increase by the amount of the sales tax but returns to labor and capital will be higher.

Criticism of the Sales Tax for Residential Real Estate Isn't Built on a Solid Foundation

by Dan R. Mastromarco and David R. Burton
[authors of the FairTax]
Tax Notes, June 29, 1998, p. 1779
Footnote #13: The degree to which after-tax wages will increase is a function of the incidence of both the sales tax and the repealed taxes. If the income tax and payroll taxes are incident on income recipients and the sales tax is incident on consumers, then after-tax wages and returns will go up quite considerably as will tax inclusive prices. If the sales tax is incident on the factors of production, then after-tax wages and the after-tax return to capital will not go up to any considerable degree (at first) but producer prices will fall and retail prices, even including the sales tax, will remain roughly comparable. The real purchasing power of wages will undoubtedly increase considerably over time because of a larger capital stock (increasing productivity), microeconomic efficiencies caused by a more efficient allocation of scarce resources, and higher productivity from lower compliance costs.

The Price Level

Switching to an indirect tax such as a valued-added tax (VAT) or national sales tax will probably cause a one-time jump in the price level, with no permanent change in the inflation rate. By contrast, any consumption-based tax that levies taxes directly on households will probably have little or no effect on the price level.
A VAT or sales tax is likely to boost the price level because each one collects the tax on labor income from the firm or retailer. That treatment represents a change from the current income tax system, which collects tax on labor income directly from the worker. Because the cost of labor to the firm would include the new tax, real compensation paid to workers would initially have to fall to match the value of their so-called "marginal product" and keep them fully employed.
Real compensation can fall in two ways: nominal compensation can drop or the price level can rise. What happens will ultimately depend on the Federal Reserve. If it fixes the price level, nominal compensation will have to fall--an event that workers might accept because they would no longer have to pay income tax and hence would take home about the same pay as now. Most analysts note, however, that workers have resisted cuts in nominal compensation in the past. Those analysts expect that firms fearing morale problems or facing union contracts will hesitate to make such cuts. In that case, nominal compensation may fall slowly to its new level, leading to higher unemployment rates in the interim. To prevent that outcome, the Federal Reserve is expected to allow the price level to rise. For example, a VAT or sales tax of 10 percent would lead to a one-time jump of 10 percent in the price of consumer products.
Further price increases may ensue if compensation is indexed to inflation. In that case, the price rise will cause a corresponding rise in compensation, and real compensation will not drop enough to maintain full employment, requiring a further price rise--that is, a wage-price spiral. That problem occurred in the United Kingdom when it adopted a VAT in 1979, although the extent of indexing there was greater than it is in the United States.
Source: U.S. Congressional Budget Office. (1997). The Economic Effects of Comprehensive Tax Reform. Washington DC: Government Printing Office.

Setting aside for a moment temporary inflexibilites in contracts for wages, bonds, and so forth (we address these later), whether ther overall level of prices changes or not does not materially affect this story.¹⁶ Even if prices do not rise at all, moving to a consumption tax would cause the purchasing power of both wages and existing wealth to decline by an average of 20 percent relative to a situation with no taxes. Nominal wages would be forced down because firms would be earning 20 percent less, after taxes, from the output produced by workers. The nominal value of existing capital assets - in the form of, for example, share prices - which constitute much of old wealth, would also decline because the output they produce provides 20 percent less in after-tax revenues.

Whether in fact consumer prices would rise in the event of tax reform depends on the monetary policy set by the Federal Reserve Board.

Source: Slemrod, Joel and Jon Bakija, Taxing Ourselves: A Citizen's Guide to the Great Debate over Tax Reform, MIT Press: Cambridge, 2004.

Transition Costs and Macroeconomic Adjustments

One of the most difficult issues to address in considering a shift to consumption taxes is the transition from the current system to the new tax regime.⁵ While all shifts to a consumption tax cause some common transitional disturbances and windfall gains and losses, the most serious problems arise from a shift to a national retail sales tax or to a value added tax. In these cases, a tax formerly largely collected from individuals is now collected at the firm level -- either from retailers on total sales or from both final and intermediate producers' value added. Flat taxes avoid this problem but can result in confiscatory taxes on existing assets.
Price Accommodation and Short-run Contractions Under a Retail Sales Tax or VAT
Holding prices fixed, these firms would need to reduce payments to workers to retain profit levels. In fact, many firms would not have enough of a profit margin to pay the tax without something else -- either prices or wages -- adjusting. Consider, for example, a grocery retailer that may have a 1% or 2% profit margin now owing a tax equal to 20% of receipts. This firm simply does not have the cash to pay the tax. If it is difficult to lower wages (and presumably it would be), a significant one-time price inflation, to allow these costs to be passed forward in prices instead, would be required to avoid a potentially serious economic contraction. Note that the price increase, were it possible to implement correctly and precisely, would solve the transition problem because although prices would rise, individuals would have more income to purchase the higher priced goods -- and demand would not fall. It is difficult, however, for the monetary authorities to engineer such a large price change. Moreover, even with the monetary expansion in place to do so, the imposition of such a tax would be disruptive if firms are reluctant to immediately raise prices, again leading to an economic contraction. That is, firms could contract their business, or even close down, until output had contracted enough to raise prices.
These disruptions are not minor in nature -- imagine the difficulties of engineering and absorbing a one-time price increase that is likely to be close to 20% (the level, approximately, that might realistically be needed to replace the income tax).⁶ Even if such an inflation could be managed, there are always concerns that any large inflation could create inflationary expectations -- it's hard to manage a single one-year price increase. In fact, economists who judge a consumption tax to be superior to an income tax may nevertheless be skeptical about the advisability of making the change because of these transition effects.

See CRS Report 98-901, Short-Run Macroeconomic Effects of Fundamental Tax Reform, by Jane G. Gravelle and G. Thomas Woodward for a more detailed discussion of these issues.
The rate would depend on whether and the extent of any family exemption. A 20% tax exclusive rate would correspond to a tax inclusive rate between 16% and 17%.
7 U.S. Congress, Joint Committee on Taxation, Tax Modeling Project and 1997 Symposium Papers, committee print, 105th Cong., 1st sess., Nov. 20, 1997, JCS-21-97 (Washington: GPO, 1997), p. 24.
Source: CRS Report for Congress: The Flat Tax, Value-Added Tax, and National Retail Sales Tax: Overview of the Issues. Esenwein, Gregg A. and Jane Gravelle.

Prices.

Prices for consumer goods and services quickly rise by the amount of the tax, and then some. The portion of the price increase in excess of the tax is due in part to the higher cost of imports (from the weaker dollar) coupled with the ability of some domestic producers of competing goods to hike their price to that of imports. Consumer prices similarly rise 25 percent -- roughly the nominal rate of sales tax, unadjusted for any exemptions or transition rules -- by 2002 and gradually drop from that peak to a level that remains about 18 percent above the pre-change baseline.
Examined on a year-over-year basis, these price increases generally amount to a large, one-time hike in prices as the NRST is imposed, with some moderation of this increase in the longer run. Due to a weaker dollar, merchandise import prices increase by nearly 4 percent shortly after the NRST is imposed and are 6.5 percent over baseline levels in 2010. Merchandise export prices are also above baseline levels. In 2001 and 2002 they are nearly 3 percent above the baseline. However, due to lower interest rates, which reduce business costs, export prices are only slightly greater than baseline levels for most of the remainder of the forecast period. The overall impact on prices is measured by the change in the GDP deflator, which initially rises 20 percent above the baseline price level before settling back to a 13 percent price rise relative to the baseline.
The notion espoused by some that pre-tax prices would drop some 20-30 percent under a NRST (so that after-tax prices would not rise and may even decline) is a peculiar one. This could only happen if all of the personal income tax, the corporation income tax and payroll taxes are currently embodied in retail prices. Tax incidence -- that is, who actually bears the ultimate tax burden -- is an elusive question that has been the focus of many economic papers, because the answer is not clear. However, the general consensus among economists is that perhaps a portion of the corporate income tax may be passed on to consumers in the form of higher prices, but that the majority is ultimately paid by corporate owners in the form of lower after-tax profits and by employees in the form of lower compensation. Most economists concede that personal income taxes and payroll taxes are ultimately borne by labor and are not passed on to consumers in the form of higher prices.
Source: Statement of John G. Wilkins, Managing Director, Barcroft Consulting Group, on behalf of National Retail Federation. Testimony Before the House Committee on Ways and Means. Hearing on Fundamental Tax Reform. April 11, 2000.

Transitional Issues in Tax Reform

Price Level Effects
Because the flat tax is similar in structure to the existing income tax system, its implementation would have relatively little effect on the absolute price level. Both before- and after-tax wages would be roughly similar before and after reform, so that nominal prices remain roughly constant.
In contrast, the effect of implementing an NRST on the absolute price level is less certain. One possibility is that the tax could be fully shifted forward in the form of higher prices for consumption goods, with no change in the price of investment goods, which are untaxed under the NRST. At the other end of the spectrum of possible responses, nominal prices could remain constant. Under this scenario, before-tax real wages would have to fall roughly to the level of prereform after-tax real wages in response to the elimination of the income tax. Intermediate responses between the "full price adjustment" and "no price adjustment" scenarios are of course also possible.
Choosing between these various scenarios requires making necessarily speculative assumptions about the response of the monetary authorities to the imposition of the NRST. However, most analysts assume that the monetary response would be sufficiently accommodating that the full price adjustment scenario would obtain.
The primary rationale underlying this assumption is the view that the downward flexibility of nominal wages is quite limited, in part because most wage contracts and agreements are specified in nominal terms. Thus, a tax reform that required wage reductions to reach a new equilibrium would be quite costly as these wage reductions would initially be distributed unevenly across industries. This in turn might result in considerable unemployment in sectors characterized by rigid wages, as well as misallocations of labor, at least in the short run. Proponents of the full price adjustment view assume that monetary policy would be expansionary to avoid these costs.
Most observers fall into the full price adjustment camp. For example, McLure (1996, p. 23) concludes that it would be "hard to imagine the monetary authorities not accommodating such an increase in prices." Gravelle (1995, p. 59) argues that full price adjustment is likely because a "national sales tax would tend to produce an economic contraction if no price accommodation is made." In its analysis of the distributional implications of implementing consumption taxes, the Joint Committee of Taxation (1993, p. 59) concludes that, "Unless there are convincing reasons to assume otherwise, the JCT staff assumes the Federal Reserve will accommodate the policy change and allow prices to rise." Finally, Bradford (1996a, p. 135), in discussing the same issue in the context of a value-added tax, observes that, "It is commonly believed that introducing a value-added tax of the consumption type will bring with it a monetary policy adjustment that would result in a one-time increase in the price level ;and no change in payments to workers in nominal terms."
Nevertheless, opinion on this issue is certainly no unanimous. For example, the alternative assumption [that wages will fall] is implicitly made by Jorgenson and Wilcoxen, who argue that implementing a national sales tax would reduce producer prices on average by 25 percent. Auerbach (1996) takes a compromise position by assuming partial price adjustment. In addition, European experience with the introduction of the VAT is mixed, generally suggesting partial price adjustment. On the other hand, Besley and Rosen (1999) find full (or even more than 100 percent) forward shifting of state sales taxes in the United States.
Source: Zodrow, George R. (2002). "Transitional Issues in Tax Reform." In United States Tax Reform in the 21st Century, George Zodrow and Peter Mieszkowski, Editors. Cambridge University Press.

Monetary Implications of Tax Reforms

Does it matter how the central bank responds when the tax system is reformed? Some economists would argue that in a very general sense it does not. Many would argue that the central bank's response would have little long-run effect, because what really matters is the productive capacity of the economy and because there could be no money illusion in the long run.
And, in the short run, the standard relation between prices and money makes it clear that, under limiting assumptions, the central bank need not change monetary policy. Consider the transition from our present tax system to a consumption tax. Ignoring any incentive effects caused by the tax reform, velocity and output are unchanged. With a revenue-neutral tax reform, aggregate after-tax income is unchanged, so there need be no demand-driven effects on consumer prices. Under these conditions, v, y, and q remain unchanged as a result of the tax reform, and thus maintenance of the status quo implies that the central bank need not change its policy. Assuming that output is constant, the central bank could eliminate any transitory price changes in the long run by leaving monetary policy unchanged.
But things may not be that simple. The implied changes to wages and producer prices require a degree of flexibility in the economy that many might find unlikely. Specifically, for the consumer price to stay constant, the producer price must fall by the amount of the tax. And because a drop in the producer price means that the business revenue produced by hiring another worker drops, the before-tax wage must drop by a corresponding amount. Many have argued that such price and wage changes are implausible and that the central bank should "accommodate" a transitory change in the consumer price level by adjusting monetary policy so that it is consistent with constant producer prices and wages.

Source: Bull, Nicholas, and Lawrence B. Lindsey. 1996. "Monetary Implications of Tax Reforms." National Tax Journal 49.3 (September): 359-79.

The Price Level

When Britain adopted consumption taxation in 1979, the price level rose by the amount of the new tax. This jump in prices caused substantial disruption in the economy, partly because it stimulated further rounds of wage and price increases through indexation formulas that failed to exclude consumption taxes from the measured cost of living. Standard macroeconomic analysis suggests that the underlying cause of such a price effect is the contractual determination of wages in money terms. Under an income tax, the wage is set in pretax terms. Workers finance consumption out of what remains of their wages after paying taxes. Under a sales tax or a value-added tax (VAT), the wage is set on an after-tax basis. Workers use their entire wages for consumption and pay their consumption taxes as they consume. When an income tax is replaced by a sales tax or VAT, the wage bargain should be revised to lower the purchasing power of wages or by raising the prices of consumption goods. As a practical matter, the second always occurs.
One of the advantages of a flat tax or a personal cash-flow consumption tax is that both leave the wage bargain in pretax form. There is no disruptive jump in the price level. Unlike other effects I have discussed, the increase in the price level is not intrinsic to a consumption tax, but is the result of a particular choice about how to administer the tax.
Source: Potential Disruption from the Move to a Consumption Tax, by Robert E. Hall. The American Economic Review.

You might be better served by reading a bit more widely rather than just data from the link you gave which is to a paper by a know vehement anti-FairTax opponent as are others such as the poster in #294 just following your link. Both individuals are aggressive SQL (Status Quo Lovers) defenders by means of attacking any aspect of the FairTax (though they do not admit their bias). Their bailiwick is under threat in their eyes.

You might for example do some study on the data from the FairTax website, especially the Economists' Endorsements, the FAQ, or the Rebuttals (this latter tab has a rebuttal of the link you posted):

FairTax website

Note also that the #294 post shows only selective out-of-context information from Kotlikoff who says he ASSUMES a certain condition from earlier in his testimony and goes on to say that IF the Federal Reserve does so-and-so then such-and-such will occur. That's all supposition and conjecture and not based upon any solid real-world condition. You might be better served (rather than falling prey to such selective presentation) to read Kotlikoff's summary from that same testimony:

"Transparency and Perceived Fairness

The Fair Tax would be easily understood by the general public, and it would be clear to all that everyone - rich and poor alike - pays the tax. In contrast, under the Flat Tax, wealthy individuals who have no labor income will appear to be paying no tax when, in fact, they will implicitly do so through the revaluation downward of the market value of their assets, assuming no special transition rules in behalf of those assets.

Conclusion

The Fair Tax has a lot to recommend it. It would most likely help the poor more than the rich. It would substantially improve the economy's economic performance. It would save Americans enormous amounts of time complying with the bewildering provisions our current tax code. And it would redress the grave intergenerational imbalance America still faces with respect to its fiscal policy."

Thank you for the information. I was against a NRST before and now I'm more sure than ever that it is a hideous beast that must never be born.

Whatever the motivation for increasing minimum wage, the effect is always a cascade of increased costs for goods and services across the board.

What would you suppose a reduction in labor costs (rather than an increase) would do to the costs of goods and services across the board?

Why should the government care if a receipt was issued?

Good question. As I said previously, I believe it is to inhibit retailers from defrauding the feds. If the retailer prints a receipt, he is likely to submit those same records (or use them as documentation) to support his claim of total sales revenue. That is not to say it couldn't be fake, just that it is less likely. Every system will have cheaters. JMHO

From what I've read, it does raise prices, considerably.

You are aware, are you not, that American people will not be paying anymore taxes than they do today under an NRST? And you are aware, are you not, that business costs do fall considerably under an NRST with the consequent competition to advance market share and optimize profits resulting in lower shelf prices before the NRST is applied.

In short, with the retail sales tax rebate provisions, you pay no more for goods and services and government out of your gross pay than you have to pay today.

The more I read, the more I hate the idea.

You are not supposed to like being taxed by friend, you are supposed to object to the growth of government that the tax system fuels.

The big thing you seem to be worried about is under a retail sales tax the American citizen will actually see what government is taking from them up front and personal.

Do you also object the citizen might be encourgaged to object to the excessive growth of government in their lives when they see the full piper's bill that government collects from us?

LINK

It is interesting that you should just happen pick an article by William G Gale of Brookings for your analysis of taxreform, "MissouriConservative".

I'm sure you do hate the idea of fundamental tax reform, as I'm sure you also agree with W. G. Gale & the Brookings Institute, that a Flat Tax is also not the way to go either. And that , as a "conservative", the Brooking's Agenda for the Nation is a more comfortable status quo direction for you.

Obviously just a few bandaid tweeks here and there on the current tax income/payroll system will make everything better. And of course we should not even think of broadbased tax cuts (even during those Clinton times of economic growth and budget surpluses).

Seems any substantive change of the way government extracts revenues from the citizens to spend on whatever government can dream up, are really not in our best interests according to William Gale, and Brookings.

http://www.brookings.edu/views/articles/gale/1999rocky.pdf

The Rocky Road to Tax Reform

Setting National Priorities: The 2000 Election and Beyond, Winter 1999

Henry J. Aaron, Senior Fellow, Economic Studies
William G. Gale, Senior Fellow, Economic Studies
James Sly, Research Assistant, Economic Studies

Conclusion

The U.S. tax system collects nearly $2 trillion from a public that dis-likes taxes but for the most part complies voluntarily. However, taxes have become encrusted with provisions that confuse filers, distort eco-nomic decisions, and necessitate higher marginal tax rates than would be required if the provisions were curbed or eliminated. Impatience with this system has led some to call for its complete replacement. At first glance, starting afresh may sound attractive, but the idea raises formidable problems of redistribution and transition and would create major uncertainties. Incremental reform is more promising, if less dramatic. Specific steps could make taxes easier to comply with and to enforce, permit rates to be cut, and promote economic growth. In taking these steps, selective tax reductions would help smooth the way to achieving these goals because every tax reform creates losers as well as winners. For that reason as well as for reasons official prudence, massive tax cuts now would be massively unwise. The nation should instead husband its resources, not only to meet looming problems of an aging population, but also to accumulate a down payment on tax reform.

anytime, for interestingly, on the otherside of the economic hill, William Gale & Brookings doesn't seem to figure, recession and budget deficits as a time for tax cuts or actual tax reform either.

For obviously government just doesn't seem to have the resources to pay for those tax cuts, being so busy spending tax dollars and all, and for any substantive change the "net effect on growth [of government] will be negative."

http://zfacts.com/metaPage/lib/GaleOrszag-2004-making-tax-cuts-permanent.pdf

Should the President’s Tax Cuts be Made Permanent?
William G. Gale and Peter R. Orszag
February 24, 2004

VIII. Concluding comments

The 2001 tax cut was designed in late 1999 and was a centerpiece of the President’s electoral campaign in 2000. Much of the 2003 tax cut was a partial, albeit temporary, acceleration of the 2001 tax cut. Now, the Administration proposes making these two tax cuts permanent. It is astonishing that, almost five years after the proposal was first made public, the Administration has still not released an economic analysis of the long-term effects or even a statement of how it intends to pay for the tax cuts. Even supporters of the tax cut would presumably like to know the answers to these questions. Our research and that of others reveals the following principal conclusions:

• Despite a forecast at the time of ever-growing surpluses over the next 10 years, members of Congress were sufficiently concerned about the affordability of the President’s tax cuts in 2001 that they scaled back the proposal and made it temporary. Three years later, the budget situation has deteriorated enormously and the legislated tax cuts themselves are much less affordable, to say nothing of making them permanent.

• The effects of making the tax cuts permanent depend critically on how the tax cut is financed. A permanent tax cut must be paid for with current and future tax increases, current and future spending cuts or increased borrowing. Borrowing postpones, but does not eliminate, the need to raise taxes or cut spending.

• If the tax cut is debt-financed for the foreseeable future, it would reduce the long-term size of the economy, would be regressive, and would hurt future generations by reducing output and increasing public debt. Over a 75-year period, it would burn a fiscal hole that would be as large as the combined shortfall in the social security and medicare hospital insurance trust funds.

• If the tax cut is financed by increases in future taxes, the net effect on growth will be negative, but the tax cut may be less regressive than currently analyzed.

• If the tax cut is financed entirely by reductions in spending, it may increase the long-term size of the economy. The net effect depends on what kind of spending is cut. Reductions in programs that produce better health, more education, improved infrastructure, etc. would likely cause reductions in growth. In addition, the required spending cuts are so large that we doubt any significant coalition of policy-makers or the public would seriously support such changes.

• Extending the tax cuts will not reduce uncertainty. Instead, it would increase the long-term imbalance between spending and revenues and make even larger policy changes required.

. I was against a NRST before and now I'm more sure than ever that it is a hideous beast that must never be born.

Now why was I certain you would ultimately say that, MissouriConservative?

As attributed to University of Edinburgh University History professor and Scottish jurist Sir Alex Fraser Tytler (1742-1813). by John Bagot Glubb :

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship

"It's like me in the restaurant: What do I care about extravagance if you're footing the bill?"
Walter Williams

[Montesquieu wrote in Spirit of the Laws, XIII,c.14:]

"A capitation is more natural to slavery; a duty on merchandise is more natural to liberty, by reason it has not so direct a relation to the person."
--Thomas Jefferson: copied into his Commonplace Book.

Federalist #21:

"Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "

"It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without defeating the end proposed - that is, an extension of the revenue."
"If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds."
"This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them."