do not confuse with the Flat tax.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. http://www.fairtax.org/site/PageServer?pagename=about_main
2007-08-21 02:16:21 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
The problems with the "fair"tax are much too numerous to mention here but here are a few highlights:
1) It would create a huge black market of goods.
2) As the tax also applies to new homes, it would destroy the US housing market along with destroying the new car market.
3) Due to the "pre-bate" it would create a whole new federal bureaucracy that would be ripe with fraud.
4) The compliance issues would expand the size of the IRS, not decrease it.
5) No one who understands accounting and/or economics buys the "embedded taxes" argument that the fairtaxers make. Fairtaxers claim that prices would go down after the fairtax and the tax itself would only bring the price back up to where it is now. This is laughable.
6) The 23% "fair"tax is actually a 30% tax.
2007-08-21 02:30:24 · answer #1 · answered by Wayne Z 7 · 1⤊ 2⤋
The whole idea is stupid, honestly.
Rich people dont consume enough stuff to make this form of taxation workable.
As it currently stands rich people and companies pay almost the entirety of the taxes the IRS gets.
This is also the reason that a flat tax wont work, because rich people are already paying 50% of their income in taxes while poor people are often paying more like 15% or even 0%.
The current system is the only system that has been devised so far that can sustain the country in the long term.
If the fair tax system was useful then some country would have already implemented it.
The sad thing is that for 99% of americans taxes are unfair, on the low end. They get so many deductions and credits these days that the government cant get enough in tax revenue to sustain operations.
Even still, people complain about taxes, and another person will say they will lower taxes so they can get elected president, and they will lower taxes, and the federal budget will go down, causing the deficit and the national debt to go even higher.
The whole reason we have a national debt is because people who make under 100k dont want to pay their fair share of taxes.
Take Berkshire Hathaway for example, Warren Buffett almost tries to maximize the taxes he pays as the CEO of Berkshire. The taxes he makes Berkshire pay is enough per year to fund everything the government does for half a working day and he has never been accused of trying to pay less taxes than the exact amount he owes by law.
On the other hand, people that make under 100k always try to cheat on their taxes and claim deductions that arent fair and they just hope they dont get audited by the IRS, knowing that the likelihood of it happening is only about 3% they do it and get away with it.
No matter what the case, until another system is designed that takes these things into account fully, no other system will ever be implemented by a government.
Raiddinn Beatdropper
2007-08-21 02:50:24 · answer #2 · answered by Raiddinn Beatdropper 2 · 1⤊ 0⤋
One of the problems with this plan is that it is based on what you spend, not what you earn. The poor spend 100% of their income. The rich spend a small part of their income most of their income is reinvested. This would turn the present sysem up side down. The poor would pay more tax and the rich would pay less.
Where would the political support for such a system come? from?
2007-08-21 05:39:30 · answer #3 · answered by Bibs 7 · 1⤊ 1⤋