There are no REAL arguments against it!
Often the conditions used to critize the Fair Tax are mis-stated. One answer gives the condition of a single mom with two kids earning 16k. She receives about 4k in EITC(redistribution from me) at the end of the year and pays no personal income taxes. That is part of the story. Now consider the "rest of the story".
She does have to pay SS (7.65%) & Medicare (2%)taxes out of her paycheck (about $1600 per year). This deduction will disappear under the Fair Tax. She will receive the monthly family consumption credit (rebate) in the amount of $329 (annual $3949) to cover anticipated federal sales tax. The prices of new goods and services should remain about the same with the reduction of embedded business tax costs being removed and replaced by the Fair Tax. Since used goods have no federal sales taxes, she can buy used clothes from thrift stores, garage sales, consignment shops etc and pocket the rebate money she does not use. She will be able to put money into savings accounts to draw interest without having to pay income taxes on it. Mortgage interests rates will be lower (about 25% less) and with a higher spendable money, she would qualify for a higher loan to buy her own home. She would not be punished by improving her position. If she earns some money in addition to her job (many people do side jobs), it will not change her income tax position and therefore have to pay income taxes and lose her EITC (my money). The Fair Tax does not care about how much income you make!
This single mom with two children would effectively pay no federal taxes and would with careful/selective spending have more to spend on a monthly basis. There would be no waiting until the end of the year to get an EITC (my money) from the government. The rebate is paid on a monthly basis. It is not an entitlement as it goes to every qualified household! (Bill Gates would qualify)
The job market with compition from businesses returning to the USA would cause the pay scales to increase whereby the single mom (parent), who is a good worker, could get a higher paying job and possibly a better work schedule of their choice in order to be with the kids!
2007-05-08 04:22:19
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answer #1
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answered by chiefcook 3
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You asked for it, so here it is:
First off, a sales tax is a regressive tax. It makes no differentiation of the taxpayer's ability to pay the tax. The working poor would be decimated by such a tax. Consider this:
A single working mother with 2 kids. Deadbeat dad pays no child support and quits any job as soon as the wage garnishments start. She pulls in $16k a year as a bank teller or a head cashier at the local Wal-Mart. She doesn't pay any income tax due to her income and 2 kids. The paycheck isn't enough to cover all the bills and by tax time she's 2 mortgage payments behind and the mortgage company is threatening foreclosure. The $4k EITC she gets on her tax return brings the mortgage current, fixes the kids teeth, and puts a set of tires on her 12 year old car which thankfully has held up fairly well but is looking more tired by the day. They survive, but only just.
OK, now with a 25% national sales tax, let's look at the picture. Of her total $20k annual cash flow, about $12k goes for taxable goods and services. She now has to shell out $4k in sales tax. She has also lost the EITC so her cash flow is now down to $12k from $20k with the sales tax bite. Sometime in July or August of the first year of the "new and improved tax" she loses her home to foreclosure and she and her kids are now on the street. Her home wasn't much but it was hers. Unfortunately rents are higher than her mortgage payment was so instead of a modest 3 bedroom home they now have to cram into a 1 bedroom apartment in a crappy area.
I have 2 friends in exactly this situation. Our current system does need repair, but an insanely high sales tax is NOT the answer.
And while we're on it, here's my slam on the so-called "Flat Tax", often touted as a flat 10% income tax with no deducitons or exemptions. To the 10% flat tax advocate: What gives you the idea that a flat 10% income tax will generate enough revenue to replace the current system? Truth be told, it would need to be closer to 27%. The rich would make out like bandits but the working poor would be destroyed and the middle class would buckle at the knees.
There's a good reason that wealthy people like Steve Forbes tout a flat tax as they'd save a bundle. His marginal rate would drop from 35% to 27%. He'd be a FOOL to not want a flat tax but working stiffs like myself would be IDIOTS to want it. My tax bill for 2006 was just over $20k (I sold off a rental house) but with a 27% flat tax it would have been nearly $34k. No thank you!
2007-05-07 20:05:58
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answer #2
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answered by Bostonian In MO 7
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truly the prebate will pay for the taxes as a lot because the poverty line. in case you start up setting up exemptions then each and each person and their mom will choose their products/facilities exempt. Liberals will say the honest tax will harm the undesirable because they spend a better % of their income on hassle-free products. they don't contain the prebate of their speaking factors. Liberals also say that the wealthy will finally end up paying a lot less because they have a lot funds mendacity round. guess what, its the wealthy persons that can discover the money for those extreme paid accountants and tax professionals to discover each and every loophole in our modern-day tax gadget which cuts down on the quantity of tax they pay. below the honest tax all of those loopholes are lengthy previous. what number of human beings did you understand order cavier, lobster and fillet Mignon at a eating position? wealthy persons have a tendency to spend more effective on nutrition, clothing, and automobiles than undesirable persons do. The purpose right here's to have a tax that everybody will pay it really is clear. So each and each person is conscious that invoice Gates will pay an similar fee as Bob the Builder. below the honest tax, all of that income tax acceptable now is going away. no more effective FICA, FITW, social safe practices, and medicare taxes. all of it receives rolled into an inclusive tax, which we pay on any new products/facilities. no more effective IRS, demise tax, capital effective factors tax, no more effective double or triple taxing our income. All of this for the fee of the repeal of the sixteenth modification. Edit: The honest tax would not get rid of social safe practices, those taxes are protected in the honest tax. This tax gadget is revenew impartial meaning it REPLACES all the taxes we now pay with the honest tax. also the prebate is paid month-to-month no longer each and each and every year.
2016-11-26 02:17:24
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answer #3
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answered by ? 4
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How about a tax system where no class is punished for being poor or for being rich.If U really want a fair tax.go move to new hampshire.No income,sales,but still some property taxes
2007-05-08 18:16:25
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answer #4
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answered by Anonymous
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the tax may be "fair" but it won't happen.
A family that makes $25,000. spends every dime of it,, a family that makes $250,000. doesn't spend nearly all of there income. The 25K family will end up paying a lot of tax as a % of income because they spend all their money.
The family making 10 times as much spend a much smaller % of income in tax.
The "fair" tax would be a burden to poor people.
here's the link you didn't include in your question
http://en.wikipedia.org/wiki/FairTax
2007-05-07 17:42:51
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answer #5
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answered by Jo Blo 6
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Nope if you know the facts then you should love it. The price of goods does not rise and the sales tax remains the same plus you keep your money. Why if you work at a low wage and the Fed, State, and insurance is tearing into your money before you get it wouldn't you want that check to be a higher
amount? That is what would happen. Doesn't sound bad at all. http://www.fairtax.org.
2007-05-07 20:36:02
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answer #6
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answered by RED 2
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how about a link?
2007-05-07 17:20:51
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answer #7
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answered by Barry auh2o 7
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