Fair Tax
Lately there's been a well-funded effort to gain support for the "Fair Tax". Fred Thompson, John McCain, Ron Paul, and Mike Huckabee have all expressed interest in instituting it. What exactly does this Fair Tax entail? According to the Fair Tax's website:
"The FairTax Plan is a nonpartisan national grassroots campaign to replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment."
- Abolishes the IRS
- Closes all loopholes and brings fairness to taxation
- Ensures Social Security and Medicare funding
- Brings transparency and accountability to tax policy
- Allows American products to compete fairly
- Reimburses the tax on purchases of basic necessities
- Enables retirees to keep their entire pension
- Enables workers to keep their entire paycheck
The growing number of supporters of this movement tout the fact this will eliminate the IRS. Ok, but won't there need to be another agency created to enforce this new tax? Surely cooperation won't be voluntary. It will need to audit businesses frequently to make sure they are collecting the right amount. The main problem with this whole proposal is the feds would still be taking the same the same amount of money from us as they are currently (or as the fair tax people call it, "revenue neutral"). Where are the incentives to actually cut spending? The only difference is it would just be taken as a 23-30% national sales tax. Fair tax supporters make sure to tell us the less wealthy i.e. everyone in the middle class will receive welfare ("prebate") checks to compensate for these new taxes. That sounds like a new bureaucracy to me. Turns out the people leaving the IRS will still have jobs after all...
"Workers will keep their entire paychecks"
For an extra day or two. These workers will need to go shopping eventually.
Supporters of the "Fair" Tax have their hearts are in the right place on this, but taxes are like cancer. They should be eliminated not replaced.
posted by GaryC
2 comments
2 Comments:
Gary, Ron Paul has not really expressed interest (John McCain really hasn't either, unless he's changing his religion again) in the so-called Fair Tax. Paul always says that the real problem is the incredible levels of spending and reducing spending should be the focus.
Also, the big thing that irked me regarding the Fair Tax was that book written and promoted by Neil Boortz. In that book's first edition, the authors double-count the savings from the Fair Tax. Though they don't explicitly point this out, the authors admit in subsequent editions that the only savings from the Fair Tax is alledgedly in the cost of compliance.
Of course, if someone wrote a book on a "new income tax", they could alledge theoretical savings in cost of compliance as well. Forbes has written such a book years ago, promoting a (somewhat) flat rate income tax. The problem with this alledged compliance savings is that it is A) rather meaningless in the bigger scheme of thigns and B) ignores that the political process will be used to carve out thousands upon thousands of special rules to help some and/or to punish others.
Bottom line: tax compliance savings will never happen, especially if, as critics of the Fair Tax fear, this national sales tax is just an additional tax and the income tax is never abolished.
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