What do you all think about the FairTax?
I saw a new discussion on business tax proposals and thought about the FairTax. I'm not sure I've ever seen a discussion about it here. What do think?
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"FairTax" is like a cute name for a crappy product. Call a consumption tax what it is.
Like Zenphany wrote, there is no such thing as a fair tax. I prefer it over the IRS, though.
It isn't "'wonderful" to receive income that you can't use without it being heavily taxed? And it isn't "wonderful" for retirees who have had their savings sacked for decades to suddenly be confronted with government-caused higher prices along with their lower retirement income.
This isn't "fair". It's a shell game packaged as euphoria.
Yes, people's habits will change. There will probably be some disruptions at first. Creative disruption! They may stop spending for a little while. But, once the burden of the current tax system is lifted, I would be so hopeful that we would see economic activity like we haven't seen since the early part of last century......and WE never actually saw that!
#2. Is rent a service? I don't have a handle on everything that will and will not be taxed. Still, taxing this way will ensure prices go down as time and competition increases, so there will be much more freedom in that respect. There is also the freedom from the IRS and the compliances costs to be factored.
#3. This is true. Here in California, people still vote against their interest and increase taxes on themselves for these criminals! Luckily most states are not the same as California and New York and will counteract the stupidity of these states when voting on "raise the tax because IT'S FOR THE CHILDREN" idiotic issues. Actually, I think more and more people will start to pay attention if they see how much money they are paying on each receipt. This will increase awareness and, maybe even in California, people will smarten up.
Now enter the FairTax, the only people who have to file anymore are the people who currently already have to file their sales tax returns to the state (I know not all states, but most). The IRS suddenly doesn't need the personnel it currently has. And, the whole department will, hopefully, be gutted (but with any government, who knows?). Yes, maybe the probability of the sales tax businesses being audited will go up. So? They collect the tax they need, file their returns like they're supposed to, and there should be no problem, right?
Anything that stops payroll deductions and the necessity of quarterly payments, however, and allows us to choose when to pay those federal taxes, not to mention eliminating those mountains of IRS CRIMINAL regulations, is a good thing.
Re: “It also gives us the freedom to decide when and how much we want to pay.” Not for most necessities, such as food and gasoline. And rent. From the FAQ: “Service providers are not exempt from the income tax today, and should not be exempt from the Fair Tax. Services now account for well over one-half of the gross domestic product (GDP). Neither consumption of services nor consumption of goods should be tax preferred.”
http://fairtax.org/faq
Re: “It puts the amount of tax you pay to the federal government right there on your receipts. Making people actually see how much they pay the government.” State sales taxes do that now. It doesn’t appear to have much effect.
"Also, as registered sellers, they are subject to the possibility of being audited by the state. During such an audit, they will have to produce the invoices for all the “business purchases” that they did not pay sales tax on and will have to be able to show that they were bona fide business expenses. If they cannot prove this, then they will have to pay the taxes that should have been paid when the items were purchased, plus interest and penalties. The probability of being audited will be much greater than it is under the current system with its over 140 million tax filers. Under the FairTax, there will be less than 20 million businesses that will be filing sales tax returns and thus subject to the possibility of being audited. Thus, the probability of tax cheats getting caught will be much greater than it is today, making tax evasion riskier than it is today. Additionally, while the FairTax has much stronger taxpayer rights than does the current tax system, the FairTax legislation provides for a number of fines and penalties for noncompliance. It also authorizes a mechanism for reporting tax cheats and obtaining a reward. An example would be 1-800-TAX-CHET."
http://fairtax.org/faq
This would be a great incentive for someone to start a new small business, don't you think?
The more I learn about the "fair tax", the less I like it. This proposal is far from ready for prime time.
In addition, they seem to be assuming that consumption patterns will not change if the “fair tax” is implemented. In fact, they will change big time. How many people will pay a 30% surcharge for a new house when an equivalent used one can be bought tax free. Same with cars, jewelry, and other big-ticket items. The “fair tax” would likely cause massive economic disruption just implementing its distinction between “new” and “used”.
In the end, to me, it seems like a baby-step in the right direction at least.
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