In response to:

The Economy in 2015 Might Shock You

Ned6 Wrote: Nov 19, 2012 12:58 PM
Regarding the VAT or the FairTax: If you replace the current income tax, 80% of taxes on income come from gross salaries, with the income tax embedded. Unless gross salaries are adjusted down (extremely difficult), the proposed consumption tax would have an immediate +20% effect on inflation, which would not hurt wage earners, but would crush those on fixed incomes. Alternatively, if you just added 5% to everything, you would reduce the number of units purchased by close to 5%. You can't increase cost on everything and expect the same amount to be purchased. Tax revenues on income would probably decline by 5%, for little or no gain in net tax revenues.

In the summer of 2015, either one or both political parties will begin the search for their next presidential. By that time, the whole tenor of political positions will have sharply changed.

At least, we can only hope so.

That's because our economy is unlikely to handle three more years of gridlock, which keeps us stuck in a phase of higher government spending and shrinking revenue. Any day now, the ever-rising mountain of debt will need to be addressed. In the face of inaction, the bond market will have spoken by 2015 anyway, as "bond vigilantes" force...
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