[groanup]

I declare you second in line to Your Nightmare. It escaped me that you too are learned about things. Your point is taken. So. In your world, is taxing income better than taxing consumption? If so fine, though I would like to know why. If not, how would you design a revenue neutral consumption tax? How would you convert the tax that Fed employees now pay on their salaries when the tax is purely consumption?

And with this outburst, I am going to puff meagerly on a cigar and be off to bed. I'll look forward to communicating tomorrow.

[Dimples]

Thanks, I'll take your kind words as a compliment :-)

So. In your world, is taxing income better than taxing consumption?

Guessing at your meaning when you use these terms, I'd say no. Believe it or not, I do believe taxing consumption to be a superior form of taxation. However, permit me to quibble over the definition of the terms "income" and "consumption". As used by economists, the term "consumption" means "income" less "investment." In that context, I do agree that the taxation of investment is a bad thing. As such, I would support a true consumption tax.

Where I take issue with the FairTax is over the point of collection of the tax (and certain falsehoods under which the FairTax is marketed.)

I prefer replacing the personal and corporate income taxes with a flat consumption tax (excludes investment) paid by individuals from wages with incentives to save otherwise taxable labor income for personal retirement. Call it a "labor income" tax. No withholding; not progressive; uniformly flat rate; taxes due monthly.

The FairTax doesn't incent retirement savings, per se, and it doesn't force Joe Taxpayer to write a monthly check ... instead it makes him feel like he's getting something back by sending him a prebate.

I favor the radical reform of SS/MC (funding and benefits) that reduces and ultimately eliminates the programs in favor of personally funded and owned retirement accounts. I prefer to keep their funding separate from a general tax so as to keep a sharp eye on the programs

The FairTax doesn't address entitlement reform and more importantly, BURIES the funding in the general revenue. BAD IDEA!!!!

I favor the elimination of the Estate/Gift Tax.

This, the FairTax does.

I favor binding the spending of excises to their intended purpose with NO mingling of such funds with "general revenues." If the purpose sunsets (like the funding Spanish American War) then the tax sunsets.

The FairTax does not do this ... it makes no attempt to reform excises at all. I fear excises will become the preferred "sneak-a-tax" under a FairTax regime.

There are other options, but these should give you an idea of the kind of tax/spend reforms I prefer.

Ultimately, however, I believe it more important to spend political capital on spending reduction and entitlement reform than it is on tax reform.