Fair tax is just that... fair...it would force the underground economy shoppers, illegals, drug dealers to PAY. Plus say good buy to the IRS. Flat tax has its benefits but keeps the power in DC...
Pass an amendment abolishing the income tax first. Then we can talk about Fair Tax.
” Flat tax has its benefits but keeps the power in DC”
not really...
it can set limitations and mandates on congress while forcing them into a strict budget. It also will attract businesses to build here because of low taxes and that translates into jobs...
1) It assumes the rich spend everything they make. If they don't spend it, there is not tax.
Example: Avg Joe makes $60,000 a year as an accountant. Joe lives paycheck to paycheck and spends practically everything he makes. Assuming a 25% so-called Fair tax rate, Avg Joe tax $60,000 * (.25/1.25) = $12,000. Effectively a 20% tax rate.
Rich George makes $10,000,000 a year as a CEO. George despite his income, doesn't live extravagantly. He also spends $60,000 a year. (Of course he has a lot of perks from the company but they don't count.) Rich George's rate is $60,000 *(.25/1.25) = $12,000. Effectively a 0.1% tax rate.
George benefits more from the system than Joe does, yet George pays a fraction of what Joe does. George's taxes are effectively deferred until he spends his income, which he may never do. Which brings us to problem #2.
1) During economic downturns, government revenues will drop precipitously. When consumption falls off, the very time that government could help mitigate a consumer panic, government will either be forced into layoffs exacerbating the downturn or they will take on truly huge amounts of debt to keep basic services running. If you think debt growth is bad during this recession, wait till you see it on the Fair Tax plan. The income tax is far more stable than a sales tax. It doesn't vary with consumption, but rather with employment. And employment is more stable than consumption.