Question


Edwin

Would you support the Fair Tax?

Although April 15th. has passed and we're 9 months out from that annual cause of heartburn and anxiety, I believe most people will agree that our Tax Code is a complete disaster. I've seen estimates that it costs approximately 50 cents to collect a dollar - not very efficient. The Fair Tax would require repealing the 16th. Amendment and replacing the Tax Code with a National Retail Sales Tax (NRST). There will be no more withholding from your paycheck. Instead, when you buy a pair of jeans or a new car or a bicycle or anything else you'll pay a 15% to 20% NRST. Food, prescription medicine and the purchase of your primary dwelling will be exempt. It will require computing what a family of four living at or below the poverty line would spend on the NRST monthly and that amount would be a prebate paid to every family regardless of income. This prebate will thus be revenue-neutral for those in the lowest income bracket. The Fair Tax will tap into the underground "cash economy" since its a tax on purchases. Its also a positive way of rewarding savings and investment - taxes will be paid only when you sell your stocks and use the proceeds to buy a boat or car or vacation cabin on a lake. Since most states already have a sales tax, collecting the NRST will be done by the states with a rebate from the IRS to pay for the additional paperwork/computer time/employees needed by the state. If there was no withholding from our paychecks and, instead, we got a monthly tax bill from our local, state and federal governments just as we do from the utility companies, the insurance company and the cable company and we had to write out the check I believe the Fair Tax would be demanded immediately. Your intelligent thoughts and comments will be appreciated.

5 months ago - 4 answers

Best Answer

Chosen by Asker

I'd support it in a heartbeat. However, too many people who would lose out if it were changed regulary misrepresent the proposal and campaign against it. So while I support it, I know that it will never happen in this country.

by shoredude2

5 months ago

Asker's Rating: 

Other Answers

Most people would not argue it is a compete disaster. While it could be improved, it could also be a lot worse. Your proposal might be a lot worse. The 50 cents per dollar collected is way off. Where did you get that figure? Federal taxes take in approx. a trillion plus dollars a year; it doesn't cost 500 billion to collect taxes. Nothing in the federal budget is 500 billion. While a national sales tax would be interesting (as long as you weren't in the poor and middle class), 15% to 20% would be way low. Especially with a "prebate." It just wouldn't collect the trillion or so that's needed. Try 30%, if you don't count state taxes, maybe 40% to 50% if you try to replace state taxes with the national sales tax. If people feel willing to pay that amount, it could work. If they aren't willing, it would drive most of the economy underground. For the "underground" economy, I don't see a compelling reason why people who sell things or produce services "outside records" would all of a sudden feel like collecting sales tax. If anything, it would increase the underground economy; people can get things significantly cheaper if they avoid the national sales tax. Believe it or not, some people are greedy. If something costs $7.50 from a chain store, but $5.00 from a neighbor (without the national tax), some people would buy from the neighbor. Can you imagine how much it would cost to enforce such a law? Despite appearances, I have argued for some sort of consumption tax in the past. After all, if you are wealthy enough to defer income, in essence you pay a consumption tax. The wealthy do. They mostly live frugal lifestyles and accumulate positive assets, which aren't taxed, and are taxed (income tax and sales tax) on the income they "recognize." It is the reckless (in my opinion) implementation of such programs which is the recipe for disaster.

by Chuckie O- 5 months ago

The words "fair" and "tax" are not compatible. I don't remember the rule from English class but you can not use the word fair as a descriptive of tax. Perhaps it is a "misnomer" to associate the word fair with the word tax. For a tax to be fair it would need to meet two simple tests. First it would need to be equally imposed on all citizens or individuals in the group to be taxed. Sort of a one person, one dollar kind of a thing without regard to income or social standing. Secondly it would need to be used for equal benefit to all those that paid excluding non-taxpayers from those benefits. Some would argue that a third condition that all agreed to the tax is required but the first two are adequate to support that there is nothing "fair" about "tax". Those supporting the so called "Fair Tax" have attached the name "fair" to a tax system that they like better than the present system. I like vanilla ice cream better than chocolate so can I call it "fair" ice cream? It may be true that the system that you suggest/support may may have numerous advantages but it is disingenuous to all it "fair". Doing so will conjure up distrust and suggest that supporters just want to do something that benefits them.

by Mathew- 5 months ago

You presume that suddenly everyone would not look for loopholes and cheerfully pay what was fair. There are two words that describe this naive notion and the first one is bull. The fair tax would be harder to enforce than the present tax and would shift the burden to the poor. It has been considered a bad idea since before most of us were born.

by Max Hoopla- 5 months ago