Where on the political spectrum do you lie? (Mods: Please don't move!)

[reaganyouth84]

[QUOTE=Amanda]Kenyth, I completely agree with you about a nationwide sales tax. Aside from its regressivity, it encourages thrift in an economy driven by consumption. If I have to pay 23% higher tax rates every time I go to purchase a car or a piece of furniture, I'm gonna buy fewer cars and less furniture.QUOTE]

Do you have any idea what that would do to our market, and economy if we cut back on what we purchase? Not only on a national level, but on a world wide level? Let's put it this way, it wouldn't be good.
-Mike

[Amanda]

That's exactly the point I was making. If a supersized national sales tax becomes law and replaces the existing income tax, as an increasing chorus of primarily Republicans suggest it should, the higher prices of goods creates a huge disincentive for making purchases. Our economy is fueled by consumer spending, and such a tax promotes thrift.

We get mixed messages on this subject all the time. Take the days after 9-11, for instance, when our elected leaders encouraged us to do our part to help the economy by "spending" at the local mall and car dealership. Message: we can spend our way to financial prosperity. On the other hand, many of that same lawmakers have since lectured us on our dangerously low personal savings rate, accusing us of recklessly spending our way to personal bankruptcy and leaving ourselves high and dry for our retirement years. Problem is, we can't spend and save at the same time. The conventional wisdom is that we're now moving into a "saving period" where consumers are more like to pinch their pennies than buy big screen TV's. On the surface that sounds good, but an economy of savers is an economy without growth. Just ask the Japanese. There's no easy answers, but the worst-case solution, far as I can tell, is a national sales tax.

[cigar no baka]

That's exactly the point I was making. If a supersized national sales tax becomes law and replaces the existing income tax, as an increasing chorus of primarily Republicans suggest it should, the higher prices of goods creates a huge disincentive for making purchases. Our economy is fueled by consumer spending, and such a tax promotes thrift.

We get mixed messages on this subject all the time. Take the days after 9-11, for instance, when our elected leaders encouraged us to do our part to help the economy by "spending" at the local mall and car dealership. Message: we can spend our way to financial prosperity. On the other hand, many of that same lawmakers have since lectured us on our dangerously low personal savings rate, accusing us of recklessly spending our way to personal bankruptcy and leaving ourselves high and dry for our retirement years. Problem is, we can't spend and save at the same time. The conventional wisdom is that we're now moving into a "saving period" where consumers are more like to pinch their pennies than buy big screen TV's. On the surface that sounds good, but an economy of savers is an economy without growth. Just ask the Japanese. There's no easy answers, but the worst-case solution, far as I can tell, is a national sales tax.

It's not that black and white. There is a balance between spending and saving that is good for the economy. Also, from time to time, more spending is helpful, other times, more saving is helpful.

I think a national sales tax would cause upheavals within the economy. I am not an economist, is anyone else? Care to elaborate?

[reaganyouth84]

It's not that black and white. There is a balance between spending and saving that is good for the economy. Also, from time to time, more spending is helpful, other times, more saving is helpful.

I think a national sales tax would cause upheavals within the economy. I am not an economist, is anyone else? Care to elaborate?

Hang on, I'll go call my buddy Al Greenspan, or as I like to call him the G-Man
-Mike

[reaganyouth84]

That's exactly the point I was making. If a supersized national sales tax becomes law and replaces the existing income tax, as an increasing chorus of primarily Republicans suggest it should, the higher prices of goods creates a huge disincentive for making purchases. Our economy is fueled by consumer spending, and such a tax promotes thrift.

We get mixed messages on this subject all the time. Take the days after 9-11, for instance, when our elected leaders encouraged us to do our part to help the economy by "spending" at the local mall and car dealership. Message: we can spend our way to financial prosperity. On the other hand, many of that same lawmakers have since lectured us on our dangerously low personal savings rate, accusing us of recklessly spending our way to personal bankruptcy and leaving ourselves high and dry for our retirement years. Problem is, we can't spend and save at the same time. The conventional wisdom is that we're now moving into a "saving period" where consumers are more like to pinch their pennies than buy big screen TV's. On the surface that sounds good, but an economy of savers is an economy without growth. Just ask the Japanese. There's no easy answers, but the worst-case solution, far as I can tell, is a national sales tax.

Ok, I though you were trying to say that if we stopped buying things like we are that our economy would be better. Now, I see that you are saying, or at least I think, is that if we stop buying then producers of goods can't make as much money or produce as many goods, therefore workers would be laid off, yada yada yada. Just making sure that you were thinking what I was thinking.
-Mike