Do you have some evidence the BEA is adjusting the PCE using IRS data or are you just making the assumption?
http://spruce.flint.umich.edu/~mjperry/Unit10.html
"NIPA arbitrarily assumes: All household spending is PCE except spending on housing. All business spending on final goods is considered Investment. "
If a business reports spending it does not count towards PCE, ever.
If that reporting business spends on a computer used for personal use of an employee, it is still assumed to be a business expenditure not personal consumption expenditure and thus is not include aggregated into PCE. It goes into the investment side of the data series.
All business spending on final goods is considered Investment.I understand that's the way it's suppose to work, but that doesn't tell me how they know the computer I bought at BestBuy was for business use. Once again you don't answer the question that was asked.
You persist in arguing against points NOT made!
No one has suggested the PCE counts business-use purchases. Quite, the contrary. It is precisely because the PCE excludes Business-Use purchases that the example works.
The individual portrayed in the example is not acquiring a PC for business use; he's acquiring a PERSONAL USE ITEM. Since there is no tax penalty for purchasing a PC at retail under the Income Tax system, the individual just buys the PC at a retail outlet today. The PCE, the one the FairTax bases its rate calculates its tax rate from includes that PC purchase as a Personal Consumption Item.
In contrast, that SAME individual, interested in acquiring that SAME Personal Use PC is incented to masquerade the purchase as a Business Expense PRECISELY BECAUSE BY DOING SO HE CAN EVADE THE FairTax!!!!! I only suggested the individual used untaxed income to demonstrate that individual's comfort level with tax evasion. Since the FairTax takes away all incentive to evade tax on income, the evader shifts his focus, and CHANGES HIS BEHAVOIR to evade tax on consumption.
He ALTERS his purchase behavior IN RESPONSE TO THE FairTax!!!
His ALTERED behavior, ALTERS the PCE.
For a guy how often berates others for being stuck on static analysis, YOU'RE STUCK on STATIC! (to steal a phrase perhaps more applicable here in its original form!)