“I’m not convinced that National’s analysis is as nuanced as you’re inferring!”

If they are thinking along the lines of the tax working group, then I think this was the road they were moving down (that was my impression from reading papers).

On the welfare idea, I intend to right about credit constraints later – shifting to GST has a welfare cost for people facing credit constraints. Given that credit constraints are even worse now, it isn’t exactly the best time to introduce the shift 😉

“Substantively, I think it’s also important to remember that the lifetime income hypothesis doesn’t have a lot of empirical support”

Consumption smoothing doesn’t – but the assumption required in the above post is weaker, it is that lifetime income does provide a binding constraint.

Substantively, I think it’s also important to remember that the lifetime income hypothesis doesn’t have a lot of empirical support. People’s consumption tends to track income far more closely than Friedman predicted. So, if the government IS thinking about it like that, then they should try consulting the data more closely.