fatvegan

As usual, maybe I'm missing something entirely obvious, but a progressive consumption tax strikes me as a ridiculous idea. Milton Friedman first suggested it I think, and he's meant to be a smart chap. It's basically a tax on the difference between what you earn in a year and what you save. Except if you spend what you earnt last year, and save 100% of what you earn this year then the whole system breaks. The poor, who can't afford the "buffer" pay all the tax, and the rich who can easily afford the buffer pay none of the tax. Brilliant.

The textbook also seems to have same wacked out theory that taxing consumption really heavily (like 60%) won't cause distortions because "rich people only buy mansions anyway" and when everyone buys a bigger mansion everyone still feels like they've got an average sized mansion. So it's actually better that people don't buy their mansions. That's literally what it says. Crazy go nuts if you ask me. When everyone has a big incentive not to buy anything, you get a recession. And they suck bad.