I agree. I do not like these "consumption" based taxes. It seems to me that when the economy tanks, the flucuation in tax revenue will be extrememly drastic and it may encourage other "temporary" taxes...
It seems to me that when the economy tanks, the flucuation in tax revenue will be extrememly drastic and it may encourage other "temporary" taxes...
Consumption expenditures are more stable than taxable income.
FairTax and Stable Government Revenue FIGURE 1: This figure compares the percentage of variation of real taxable income and real personal consumption expenditure to a steady state constant growth curve. Personal consumption expenditure (PCE) |
You're looking at things backwards.
If the economy 'tanks', and the American people are having to do with less, that would be a good time for government to have to tighten its belt as well.