WHICH IS WHY WE SHOULD TAX ONLY CONSUMPTION:

The typical American family is earning more than ever before. But for many it probably doesn't feel like that - at least as much as it should - because all of the income gains and then some have been offset with higher spending.

You could say higher spending is the goal. But all new luxuries become necessities in due time as expectations reset. I suspect part of the reason people don't feel better off is because financial progress is better measured by wealth, not income. And wealth is just the accumulation of income you haven't spent. So a lot of people are the financial equivalent of the exerciser who burns 500 calories then immediately offsets it with dessert and is frustrated by the lack of progress despite working so hard.

I get why it happens. Spending more when your income rises is as tempting as eating more after you exercise. It feels earned and justified. People's lifestyle expectations are driven by their peers, so when everyone spends more you feel entitled to do the same.

But all wealth relies on the ability to receive an extra dollar and say, "I could spend this, and spending feels great, but I'm not going to." It's the same as turning down a big meal after working out, and it's just as hard. All great things are hard.

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