Now on Ezra

Another case of Ezra not asking the meaningful questions in this interview with Robert Frank. This is just to reiterate my complaints about Frank regarding the "progressive" consumption tax from a few days ago.

First, in an economy suffering from too little demand, a progressive consumption tax will reduce demand further...particularly on those most able to adjust their consumption/savings amounts. This will make the economy worse. We have lots of cash tied up, this would do the opposite of what is necessary, encouraging people to keep money out of the economy.

Second, a progressive consumption tax isn't progressive, because (really) rich people have more disposable income and save/invest much larger fractions of their income.

While Franks arguments in some cases have merit, they should be looked at differently. The tax code encourages much of the bad behavior he attributes to over-consumption. Elimination of all deductions would go a long way to getting people to buy smaller, less expensive houses. Higher gas tax would encourage smaller more fuel efficient vehicles. If people actually paid what things really cost rather than the risk deferred & socialized costs we now pay (thanks in large part to the tax code) consumption would correct in a way it seems he would consider beneficial.

A pure consumption tax, however, just penalizes all consumption, no matter its benefits, and comes down hardest on those who have the least disposable income, not those with the most.