“The Fair Tax Book” by Conservative Syndicated Radio host Neil Boortz, and Rep John Linder (R-GA) proposes a sweeping and radical change to the system of Federal taxation in the United States.
These changes are currently being considered in Congress as H.R. 25 in the House, and S.25 in the Senate. The book is an easy read, at only 198 pages. The ideas presented are simultaneously simple and radical, but deserve a serious look. Any of the ideas, when taken separately, might seem insane, but only the combination of each and every aspect of the program would stand a chance of being effective and fair.
The first part of the book details the history of the Federal Income tax, beginning with the 16th amendment to the constitution and subsequent legislation over the decades that has turned the system into what it is now: burdensome and complicated. This part of the book is a hard read, and I must admit that before I could get to the “meat” of this book, I got mired in this section and set down the book for a couple of weeks. Don’t get me wrong – it’s important subject matter. The authors do a good job in explaining how they believe the current tax system is unfair, costly to the economy, and a disincentive to domestic business and investment.
In a nutshell, what the Fair Tax proponents want to do is this:
1. Repeal the current Personal Federal Income Tax system entirely, including payroll tax withholding for Federal Income Taxes and Social Security and Medicare, along with the Alternative Minimum Tax (AMT), Estate Tax, Gift Taxes and so forth. 2. Repeal corporate Federal Income Taxes altogether. 3. Impose a universal inclusive sales tax on ALL retail purchases with NO exceptions – this would differ from most state sales taxes in two ways:
a. Nothing is exempted – not food, not drugs, nothing. Every retail purchase of NEW goods OR SERVICES would be taxed at the same rate – approximately 23% b. The tax is “inclusive”, meaning that if you purchase an item marked with a retail price of $100, you will pay exactly $100. The government would receive $23, and the retailer would receive $77.
4. Issue a monthly sales tax “pre-bate” to each and every household based upon the amount of sales tax that a family of the given size would be expected to spend on necessities such as food and medicine.
If you’re like me, and this is the first you’re seeing of this, skepticism and a multitude of questions about the implementation and impact of this proposal are likely screaming out in your head. My initial reaction to many of the assertions was to roll my eyes and almost vocally call BS on them.
However, the authors do a good job of presenting the rationale behind each of the pillars of this legislation. With few exceptions, the authors answered my questions with fair satisfaction almost as soon as they came to mind. I’ll do my best to replicate that here by summarizing their rationale:
First, the tax is designed to be revenue neutral, which means that the rate of taxation will be calculated such that it brings in as much revenue as the current tax system does. They admit that solving our spending problem is still an issue, but one to be taken up separately. The government will continue to fund Social Security and Medicare – the authors argue this will actually fund them better.
Second, this taxation system is neither regressive nor progressive. It’s not based on income or wealth, but rather consumption. Those who consume more – generally those who earn more or have more wealth – will pay more. The “pre-bate” portion of the bill ensures that there will be NO tax burden on the poor at all. Currently everyone who earns income from a job pays 7.65% of their pay in Social Security and Medicare withholding. In addition, the employer matches an additional 7.65%, making the total tax burden on the individual 15.3%.
As a liberal and an environmentalist, I like this part the most. First, zero tax burden for those living at or below the poverty level. That’s an improvement. Secondly, taxing an activity discourages it. Our country has a problem with over-consumption, using a disproportionate share of the world’s resources. Taxing based on consumption also makes the wealthy pay a fair share. Those $1000 bottles of Champagne that Paris Hilton and her spoiled vapid friends consume would net the treasury $230.
By discouraging consumption we thus encourage saving. In fact the authors do point out that the savings rate should increase by a good bit since people will now take home their entire salary without tax withholding.
The authors make pains to distinguish their plan from other types of taxes, such as the VAT (Value Added Tax) or the Flat Tax, which is truly regressive.
Since Federal income taxes on corporations end up getting passed along to the consumer in the form of built-in tax burden on most goods and services, these taxes are a politically convenient way to hide the tax burden from the taxpayer. Further, the common practice these days is to move corporate headquarters off-shore as a means of avoiding US tax liability. In addition, since foreign corporations don’t have the built-in tax burden that American companies do, this puts them at an advantage. They imply for instance that DaimlerChrysler might instead be called ChryslerDaimler and be located in the United States if our tax code did not tax corporate earnings.
By removing corporate taxation, we do several things: 1. We reduce the base price of goods and services by reducing the underlying tax burden introduced at each stage of production. 2. We free corporations to make decisions based more on the business merits rather than tax implications. 3. We reduce the cost of compliance. Nearly all retail companies already collect sales tax. It’s simple to calculate and remit. 4. Corporate lobbyists will be out of jobs. The $16 Billion spent annually on lobbying Congress for tax favors can feed back into the economy. Our Congress will have less corporate money distracting them from their real jobs.
By removing Federal tax withholding for individuals, we accomplish several things:
1. April 15th becomes “just another sunny spring day”. The burden of the individual taxpayer to file their taxes or pay to have them done goes away. 2. An individual would now take home their entire salary and would thus have more disposable income. The authors believe the extra disposable income would result in:
a. Increased savings – I’m in full agreement here, and hope this is where the money will go. b. Growth of the economy. Reviewer’s note: Economic growth is one of those nebulous things that is hard to fully grasp the implications of. We know generally that economic growth is good because it keeps people employed and increases our standard of living. We know that economic growth leads to more tax revenue. However, I’m not sure that current measures of economic growth really indicate the increased value to our society. Economic growth can occur even as people work more, consume more, wreck the environment, and have more hectic and less fulfilling lives.
3. The government no longer gets to keep your money interest-free until tax return time. 4. This levels the playing field for those who “play by the rules”. The authors make a compelling case – even quoting Eric Schlosser’s “Reefer Nation” – that the underground economy would no longer have the advantage. These ill-gotten gains would be taxed when they are spent.
The book goes on to address other topics, such as the implementation plan – that income taxes would cease on Dec 31st of the year of implementation, and the Fair Tax would begin Jan 1st. The initial exception to the rule is that merchants would be allowed to sell their current inventory – as of Dec 31st – without paying the Fair Tax. This is justified, they say, because those goods would already have had to corporate tax burden built-in to their prices.
The major opponents of the Fair Tax, say the authors, are those with the most to lose from the massive simplification:
Lobbyists – These K-street folks earn million dollar salaries schmoozing Congress to win tax incentives, loop holes, and giveaways for their clients – large corporations.
Politicians – Because the Fair Tax is an across-the-board single rate proposition, politicians will no longer be schmoozed by lobbyists to the extent they are, and they can no longer use taxation as a political tool to polarize their constituencies or favor certain pet-projects or friendly supporters.
The authors argue that this bill is the most massive give-back of power to the American people, and that may be true. The individual’s decision to pay taxes is in their own hands. They vote for their own tax each time they open their wallets and make the decision to spend. By being frugal, saving your money, and/or buying used merchandise or autos, or houses, you can decide to pay less.
The major faults that I can find with the proposal are as follows:
1. The figures quoted as the “embedded tax burden” on goods and services (They say about 22%), are estimates at best, and seem to assume that the goods are produced entirely within the US economy. Foreign produced goods wouldn’t have their embedded tax burden decreased by as much unless the import duties were removed. Doing so could put foreign producers at an even better advantage over US producers, thus backfiring. 2. With an across-the-board increase in take-home pay, it seems to me that inflation should be a worry due to a suddenly increased demand. The authors claim that interest rates should decrease by about 20%. The increased money supply in the public’s hands would seem to reinforce that, but I still don’t feel assured. 3. The authors claim – and with the backing of a lot of economists – that the employer’s share of Social Security and Medicare withholding is actually a salary cost to the employer. I’m not convinced though, that employers would increase wages by the 7.65% that they’ll be saving. Some would, but others would view it as a windfall. 4. Retirees, who are currently receiving fixed incomes from money that was already taxed will be paying double-tax – having first paid the tax on the money when they earned it, and again when they spend it. The authors concede this point, but reassure the reader that in their view, the general reduction in prices of consumer items due to reduced embedded tax burden would just about overcome the Fair Tax. In addition, these folks would be receiving their monthly “pre-bate” just as all Americans do. 5. The authors claim that the tax would be “across-the-board” with no exemptions or deductions for any reason, however – they don’t do a good job clarifying whether the Fair Tax applies to ALL goods and services – even those used by businesses, such as new machinery, new buildings, computer programming, and other capital outlays. It’s assumed that raw materials are not taxed, because the book makes pains to point out that things are only ever taxed once. It seems paradoxical to me:
a. If you DO tax capital outlays for business, then the built-in tax burden of goods and services doesn’t seem like it could decrease as much as they claim it will. b. If you DON’T tax capital outlays for business, then there we will open up a huge hole for tax fraud, with individuals purchasing personal items and claiming them as small business capital. Granted this is already a problem under the current tax code. The authors concede that cheating will always be a problem but claim that because this system requires both the seller and purchaser to conspire to cheat, there will be less cheating.
6. Though the authors believe that states will hop on board with the Fair Tax as their funding mechanism, this bill doesn’t address that. In all fairness though, state taxation is beyond the control of the Congress for good reason. 7. Because the tax is “inclusive” – meaning that it’s built in to the price of the item you’re buying, there is a matter of mathematical semantics. You see, if the price of an item is $100, the retailer will receive $77 and $23 will go to the federal government. Retailers will price their merchandise so that they make a profit based on what they paid wholesale for the item. So when a retailer sets the price at $100, they’re really setting their price at $77, knowing that $23 is tax. $23 out of $77 is really 29.9%. The authors believe the 29.9% (lets just call it 30%) is not a fair characterization because it compares the current income tax system which is “inclusive” to a number that is “exclusive”. By example, consider $100 earned under the current tax system, but assume the 23% rate is in effect for both systems:
a. Under the existing code, you might earn $100 but take home $77 – a 23% hit b. Under the new code, you earn $100, keep all of it, and spend it on a $100 item. 23% of your purchase price goes to the Federal government. Or you could look at it as if you were purchasing a $77 item, and paid $23 in sales tax, which would be a 29.9% sales tax. Either way, the money is the same.
8. The book mentions various studies and figures to support its assumptions, but there really are no substantial footnotes or references.
Overall, I’d say this book is a good and interesting read. Whether or not you agree with the plan, the fact is that the Fair Tax proposal is gaining momentum and will be increasingly a topic of discussion and debate. I recommend that you get a copy at Half-Price or through Amazon or your local library.
As for me, I wouldn’t say that I’m totally sold on the idea – just that I’m open to the theory and would like to see more studies and more evidence. I need more time to think of the tough questions.
Also, let me say that I've listened to Neil Boortz's radio show, and I generally disagree with his conservative rhetoric - especially his mischaracterization of liberal thought. But because this is not the same old tired "trickle down" conservative BS, I think it deserves some consideration.
The comments are owned by the poster. We aren't responsible for their content.
Poster
Thread
Anonymous
Posted: 2006/6/9 5:48 Updated: 2006/6/9 5:48
Not sold on the sales tax
I have to admit, I haven't read this book, but I think I've got a pretty good idea of the gist of its arguments. I also think the diversity of support for this sort of plan is pretty interesting. One thing I’ve noticed is that the economic ideas of politicians are pretty much all over the map, and are much less subject to the ‘party-line’ consensus of hot social issues. Bill Clinton, for instance was fairly conservative and pragmatic when it came to economic policy, working relatively well with the Federal Reserve to coordinate economic policy and balance national growth, and supporting expanded free trade (which is one of those rare issues which virtually ALL economists support). Clinton got a lot of grief from fellow democrats for not being more economically ‘liberal’. On the other hand, when George W. Bush was first elected, he had an almost ideological drive to cut taxes, despite a strong economy in which significant tax cuts were not deemed to be wise by many economists, including Alan Greenspan, because of the inflationary effects, among other reasons.
For Bush, it was an issue of fairness, if you take him at his word. He was merely proposing to return the federal spending surplus to the taxpayers. Why, after all should citizens have to continue to pay taxes to a government after all expenses had been met (Federal debt notwithstanding)? Isn’t that unfair?
Well, it depends on how you look at taxation. What is a ‘fair’ tax, anyway? Virtually any tax system will place heavier burdens on some groups than others, and it probably would be impossible to create a tax system that all members would call ‘fair’. My own opinion is that the fairest tax system is one with a minimum possible economic impact. In other words, even though the government has to extract a fixed amount of money from the economy, the actual tax burden will vary based on how the government chooses to tax. I think it’s critical to have an idea of the impacts of a tax system before committing to it.
I think it's important to note that spreading a tax burden evenly over everyone in society does not make a fair tax system. In fact, there’s only one sure way I can think of to spread the tax burden evenly over the entire population, and more than one nation has destroyed its economy by doing it. It’s simple, keep printing new money to pay for all government expenses.
The standard for measuring the economic impact of taxation is the effect of the tax on GDP – the total sales of goods and services within a nation. Clearly, it’s desirable for this number to be as high as possible, since it also equates to the sum of all income within a nation. So how would switching over to a national sales tax impact GDP versus income tax?
Well, firstly, the switch itself would be tricky. The buying power of money would go down as the sales tax went up. Although income would supposedly go up, existing wealth, money, and financial assets would be worth less and the effects would be predictable – lowered consumption and a stall on sales of high value items like homes. Any sustained decrease in consumption would imply a recession, and unemployment would probably rise. The value of the dollar would also fall accordingly.
Let’s just put these problems aside for now and assume that transition period would be sufficiently gradual so that we get past it unscathed.
Even afterward, the relative cost of goods will still be higher than before the transition. This is because as you raise taxes on goods, the prices of those goods go up, and the demand goes down. This happens in a curvilinear function such that marginal increases in the sales tax will cause out-of-proportion decreases in consumption. In fact, there will be a point on that curve where an increase in sales tax rates will result in a decrease in tax revenue, because the additional price will have caused such a drop off in consumption. This is the law of supply and demand.
At this point, you may be saying, “Wait! Won’t the relative increase in income realized by the elimination of the income tax compensate for the increased price of goods?”
But the answer is no, because taxes on income have the peculiar quality of having a minimal affect on behavior in the labor market.
Let me explain: When sales taxes go up, people respond by purchasing fewer goods. This is inefficient, because the government requires a larger increase in sales tax rates to realize a much smaller increase in actual revenue. In contrast, when income tax rates go up, the law of supply and demand would seem to dictate that people would work fewer hours, right? Wrong. It’s been observed that people continue to participate in the workforce at the same rate (hours per week), regardless of income. So, if you lose your $20 per hour job, you’re probably not going to decide to work less, even if you’re forced to settle for $15. This means that it’s much more efficient for the government to tax your income, because the extra burden won’t cause you to drop out of the labor market, whereas a tax on goods will affect your behavior in the goods market. Effectively, as your income goes down from taxation, your willingness to purchase goods drops in direct relation to the tax, and not in the precipitous curve created by a sales tax. With an income tax, the government can tax the economy much more than would be possible with a sales tax without the dangerously compounding effects.
You really can’t beat an income tax for economic efficiency. If it were up to me, I’d get rid of all marginal taxes on consumption and replace them with income tax. Is it fair? Who cares!
One other thing I failed to mention earlier, but bothers me about the "Fair Tax" plan is that government will lose its power to use taxation as a carrot and stick to encourage or discourage certain activities.
For instance, "sin" taxes: Alcohol and tobacco NEED to be taxed to a point that keeps the demand lower AND funds programs to pay restitution to victims of drunk driving, or reimburse healthcare providers for treating indigents with lung cancer
Gasoline and other petroleum products also need to be taxed to a point where there is a good incentive to use less of it.
There are lots of things in our society that we consume but don't pay the full price when we purchase. Oil dependence being a prime example - heck fossil fuels in general. How many coal miners have died? How many wars will be fought to ensure the oil keeps flowing? What is the value in dollars per acre of land that is permanently contaminated by industrial pollution? Who reimburses my sons for their lost time when they have asthma attacks from air pollution or some a-hole's cigarette?
I don't think 23% is enough for ALL goods and services.
And it's too much for others. One noteable exception the authors made was that college tuition should be non-taxable.
Touche. You're absolutely right about 'sin' taxes and such. I also agree that the purpose of these taxes should be to help offset the 'real' cost on society of the consumption of these goods(and of course, to encourage healthier behavior). I don't know much about the federal budget, but I doubt that all the revenue collected from gas taxes goes to the EPA and funds environmental cleanup/fuel research, etc... From the sole stance of revenue collection, gas taxes are pretty inefficient, and probably wouldn't be a great place to find extra dollars to fund the government(in the vein of Ross Perot).
Poster
Thread
Anonymous
Posted: 2006/8/9 13:19 Updated: 2006/8/20 7:23
Re: Consumption taxes
I think the objective of taxation should be to fairly and efficiently deliver revenue, not encourage or discourage economic activities.
The FairTax does not change change excise taxes (gas/alcohol/tobacco/etc.) as those are handled separately in Federal regulations. In most cases, I think the State excise taxes are greater than the Federal.
Education is considered an investment and, like other investments, is not taxed. When the product of an investment, whether increased wages from education or capital gains, is consumed, it is taxed.
Poster
Thread
Anonymous
Posted: 2006/8/14 13:39 Updated: 2006/8/20 7:24
Re: Consumption taxes
It shouldn't be the business of government to regulate consumption through taxation. Considering "sin taxes" as a viable method to regulate products such as tobacco is insane. If a product kills it's consumers, then eliminate the product. By using it as a source of revenue, a bias is formed in favor of maintaining the revenue source. There are other avenues available to the government to regulate unhealthy products.
I think that the Fair Tax initiative makes great sense - and two items you didn't really emphasize to any extent are (1) the billions of dollars saved as a result of eliminating the IRS (the cost of the IRS salaries, plus the compliance costs)and (2) the new sources of previously untaxed revenues (money earned from illegal activities) which will be available to the government. Thus prostitutes and drug dealers will have to pay their fair share of taxes.
As a business owner, one other item worth mentioning is the fact that elimination of business taxation would greatly stimulate the number of startup businesses. This would increase domestic opportunities in the face of global outsourcing and would greatly reduce unemployment - thus reduce pressure on government unemployment assistance programs.
One more thing - even if my individual tax burden increased a bit under FairTax (which I don't think it would), I would gladly pay more to eliminate the April 15th day of terror.
I'm not saying I'm in love with the current tax system, but I should point out that certain activities have a societal cost that is not always borne by those "benefiting" from the activity.
Lets take tobacco as an example: As a Democrat and proponent of a free society, I'm not in favor of "eliminating the product." Though the product is both dangerous and offensive, I have no problem with people using it in moderation. I occasionally smoke cigars - maybe several times a year, but not often enough to cause myself any health problems. Whatever "sin tax" is built in to the price of a cigar is no problem for me, since cigars are a miniscule portion of my discretionary spending.
There are those, on the other hand, who smoke cigarettes heavily and habitually. This has an enormous cost on employers due to lost work time for "nicotine breaks" and general absenteeism. For this reason, many employers now put "non-smoker" in their job postings. Smokers' increased levels of both temporary illnesses such as bronchitis and chronic, deadly illnesses such as lung cancer and emphysema add a strain to our healthcare system in two ways: Those who are insured use medical services more, causing our premiums to rise. Further, those folks who are lower on the socio-economic ladder tend to gravitate towards smoking more so than the baseline population. These folks are more likely to use government-provided healthcare services, such as Medicaid. In some cases, they just rack up hospital bills they can't pay.
So for this reason, I favor the "sin tax" on tobacco - not because I want to "punish" smokers, but because I believe they should pay the full price for their habit.
The problem as I see it, is that the government does, as you point out, tend to rely on that revenue. I think that mentality is wrong. Revenue from these taxes should be 100% off-limits to legislators, and should go directly into state and federally funded programs to increase education about the dangers of these products, and to reimburse healthcare providers for their losses.
To be fair, sin taxes can and do encourage an underground market, but not to the extent that banning the substance does.
I would be interested to see what would happen to the illicit drug trade if marijuana were legalized. I'm not saying I necessarily advocate for that, but lets just think about it for a second: Because the product is inherently inexpensive to produce, market prices would plummet overnight. I'm guessing that right now, a single joint might cost $2 - $3. If legalized, that might buy someone a pound.
Having extremely low prices, would mean that folks who derive their income currently from selling illegal marijuana could no longer make any money doing so. This might temporarily de-fund some criminal operations, but not for long.
Further, you'd have the problem of increased supply causing increased consumption - not necessarily in the public's best interest.
If the government were to step in and introduce the marijuana sin tax, the cost of marijuana could be kept approximately what it is now, but might even could go higher since people would be more likely to pay more for a standardized and legally produced product that doesn't risk them a criminal record. This would make the cost still high enough to suppress demand, but not so high that harder drugs become more appealing.
If marijuana were ever legalized, the "sin tax" would have to play a major role in the switchover from underground to legitimate sales, to reduce the effect of the "law of unintended consequences". I mean this would have to be very seriously studied and debated. And of course, all of that money would need to be poured back into drug education, prevention, and treatment programs.
Although I do believe that the Fair Tax would reduce the personnel costs of the IRS, I think the argument that it would be eliminated is overstated, for several reasons: <ul> <li>Past years' taxes are still out there needing to be collected. There will still be enforcement actions and collection activities for taxes owed from past years.</li> <li>The IRS already runs pretty lean. (for a government agency) Republicans have made it much easier to cheat, by reducing the IRS' enforcement budget, so that they have already been auditing fewer and fewer returns each year.</li> <li>There will still be reporting requirements for businesses. Businesses will still try to game the system, and some will try to cheat. A new breed of auditors would be necessary to compare inventory records with sales tax reports and register receipts. Simpler than the current tax code? Absolutely. But as simple as they propose? Not on your life. There will be both compliance costs and enforcement costs. There will be an initial period of friction as folks switch from one system to the other, and that will cause some pain. One of the compliance costs will be reprogramming of cash registers and accounting software. Much of the software out there can only handle one tax rate per location. In this case, we would have one federal tax and one state tax, each computed based on a different number. As a programmer, I can tell you that a lot of software will fail. Software vendors and consultants will have a GREAT year during the switchover. Think Y2K...</li> </ul>
I dont think the Fair Tax will necessarily make it easier for small business owners - especially startups.
Let me explain: I'm also a small business owner. I had several ideas during the dot-com boom, and spent a lot of money to try to turn those ideas into a successful business.
Since my startup made no money the first few years, I paid NO taxes. I did have to file, which was a pain, but the net effect was that my business losses offset my personal income tax, which reduced my tax burden. As I would purchase capital equipment, I knew in the back of my mind that Uncle Sam was actually chipping in some of that cost because it would offset my income at my highest marginal tax rate.
Further, now that my business is finally poised to turn a profit this year, we have carryover losses from previous years (something the flat tax doesn't address) that will help offset my first couple of profitable years.
Small businesses do not make as much money as large businesses, and therefore do not pay as much in taxes. This partially helps small businesses compete, since they don't have the economies of scale, and they don't have the sophistication of the large companies that HQ themselves in Bermuda.
The Fair Tax book is not very clear on whether business equipment and overhead is taxed. If so, it could actually hurt startups. If not, then it requires an exemption, which would have to be administered by someone (IRS) and audited to ensure compliance.
As for April 15th... It should never be a day of terror. Using the concept of personal responsibility here (yes, you just heard a liberal say personal responsibility) folks should do their best to have the proper withholding from their paychecks via the W-4, such that they either owe nothing or have a very small refund. Very smart folk would have as little as possible withheld, but would deposit money in an interest-bearing account such that they had the correct amount available (and not a penny more) for paying their taxes on April 15th.
Business owners - especially small business owners - tend to make the mistake of failing to set aside and timely file what they need to for taxes. I believe this is the source of April 15th horror - not the government.
BTW, I hope that you'll take all of these comments as constructive criticism. I still have an open mind about the Fair Tax, and think it *could* work, but there are just a lot of details to be settled, and I'm not sure our nation can muster the political willpower to make such a drastic change. Our country is like the proverbial frog-in-a-hot-tub. The heat is rising, but we're not ready to jump.
Poster
Thread
Anonymous
Posted: 2007/8/20 19:25 Updated: 2007/8/20 21:05
STUPID
I AM 67 YEARS OLD AND HAVE PAID UP TO 50% TAX ON THE MONEY (CD'S) I NOW AM LIVING ON. THIS NEW 23% TAX WOULD TAX ME AGAIN ON ALL THE ASSETS (NET WORTH)THAT I HAVE. IN FACT THE GOVERNMENT WOULD OWN 23% OF ALL THE NET WORTH IN THE USA AS SOON AS THIS NEW TAX PASSED.JUST WAITING FOR YOU TO SPEND IT. THINK ABOUT IT. EVERYTHING YOU NOW HAVE OF ANY VALUE (ASSETS) OR NET WORTH THAT YOU HAVE ALREADY PAID TAX ON WILL BE TAXED AGAIN WHEN YOU SPEND ANY OF IT. THAT WOULD INCLUDE YOUR SAVINGS,CASH,CD'S,HOME,AUTO'S ETC. HOW STUPID CAN WE BE ??????????????
Well, yes - taxing you again on the same money would be stupid. I think the idea is a little far-flung and regressive. In all fairness though, I believe the authors talked a bit about this problem, and might have proposed some sort of transitionary exemption to deal with it.
I think if we simply closed some of the current holes in our tax system that encourage the outsourcing of the US economy, and allow the uber-wealthy to get by with little to no taxes, then we would be set.
Poster
Thread
Anonymous
Posted: 2010/12/4 13:30 Updated: 2010/12/4 13:45
Re: STUPID
The current tax system already has a 22% embedded tax caused by compliance costs of businesses and the tax burden that falls on them. Switching to the FairTax would get rid of that 22% tax that everyone pays without knowing it, and it would replace it with the 23% FairTax rate. Either way, you are being taxed twice; The FairTax just does not try to hide the fact that it is a tax.
Poster
Thread
Anonymous
Posted: 2010/12/4 14:13 Updated: 2010/12/4 14:29
Re: STUPID
Seriously? You are responding to a story from 2006 and a post from 2007. It must be a slow Saturday for you to go trolling for stories to respond to from that far back.
Consumption taxes
STUPID