What do you know about the Fair Tax plan?

Question

Would Huckabee's plan to rid us of the IRS and replace it with a Fair Tax be a good thing for middle and lower America?

Thank you very much, Boston. I thought I smelled a rat and you just caught him in his tracks. everything you've written makes perfect sense.

Answer 1

It would be a terrible deal for the poor and middle classes. It would be a massive break for the wealthy.

Proponents of the mis-named Fair Tax assume that the wealthy spend all of their money. This is an exceptionally naive assumption. The wealthy are wealthy because they hang on to their money, not spend it! (OK, the odd Paris Hilton excepted.) The truth is that the poor spend virtually every penny they get covering basic necessities. The middle class may live better but they do spend most of their income on necessities and "conspicuous consumption" items. The wealthy on the other hand spend a tiny fraction of their holdings and would therefore pay a substantially lower portion of their total income and pay less tax proportionally.

The Fair Tax is a massively expensive national sales tax, levied at 30%. That's on top of existing state and local sales taxes. Those state and local taxes run as high as 8.75% to 10% in some areas. So, if you bought a new $200,000 home you'd pay an additional $60,000 tax on top of the purchase price. Or if you bought a new $20,000 car you'd pay an additional $6,000 just to get your tags.

Even with the so-called "prebate" that is supposed to cover the tax on basic necessities the tax levy of the typical American would rise substantially. Additionally there would be massive fraud on the prebate that would require that the IRS would have to track the composition of family units in real time because the prebate is not a flat per-citizen payment.

Black marketing activity to attempt to avoid the tax would negate the touted benefit of extracting tax dollars from the underground economy such as criminals, illegals, etc. It would just generate a new class of tax cheat: The average American. This would lead to draconian new laws as the government attempts to combat illegal black marketing activity. Imagine an IRS field audit at your home, digging through your underwear drawer looking for the tax stamps on your gruns or digging through your trash looking for untaxed Cocoa Puffs boxes.

The current tax code does need some cleaning up, no question about that. The AMT needs to be re-set to 1969 inflation adjusted dollars and then permanently indexed to inflation. Capital gains taxes need to be graduated just like the basic income tax is -- they can still be taxed at a lower rate to encourage investment but even Warren Buffett agrees that he pays too little tax because of the way they're taxed now.

What we DON'T need to do is to collapse the economy with the "Fair Tax" and that is exactly what would happen -- the new housing industry would collapse overnight, as would the auto industry and other big-ticket industries. The fallout from the loss of jobs would quite literally trigger another Great Depression and lead to widespread public unrest. No thanks!

As soon as any politician goes on board with the "Fair Tax" or "Flat Tax" they are stricken from my list of people I'm willing to expend a vote on. I don't begrudge the wealthy what they have, but I'm NOT ready to give away the farm for their further benefit.

Answer 2

It does no longer artwork! first of all, the excellent you could desire for is a renamed IRS, no longer an removal of the IRS. in spite of tax device we've, there'll be a choose for sequence and enforcement. Secondly, it shifts the tax burden style the top to the middle classification. customarily, the middle classification spends a much better share of its earnings than the wealthy. Thirdly, the Fairtax assumes each and everything is taxed. This is composed of medicine, hire, vehicles, residences....each and everything. in case you initiate off removing particular products, than the cost could could desire to circulate up. next, the Fairtax lies with regard to the cost. the cost that they talking approximately is 30%!!! (no longer 23%). They get the 23% by using dividing the tax by using the whole cost. think of paying 30% extra for each little thing which you purchase. At a 30% cost, fraud could be ordinary. the whole "imbedded tax" argument that the fairtaxers placed forward is ridiculous. The fairtaxers for sure don't understand accounting and taxation. ultimately, the Fairtax is purely gross sales independent in the previous the "Prebate" is allowed for. reducing a examine to each family contributors to offset the tax on needs could rigidity the cost to up in case you had to make it gross sales independent. by using this "Prebate", the Fairtax could fairly create a paperwork that could desire to dwarf the size of right this moment's IRS. purely some products off of the right of my head......

Answer 3

"Getting rid of the IRS" sounds good on the campaign trail but it isn't very realistic. Even if the Fairtax passes (which it won't) the government would still need a way to enforce the tax laws and collect taxes. The fairtax doesn't eliminate the IRS. It just renames it.

Answer 4

i suppose, now that i think about it, its not a good plan. spending would slow immensely and burden the industries that make America great. that would cause massive lay offs. not fair at all.

Answer 5

Prefer the "Flat Tax". Everyone pays the same % of their income ! The more you make , the more you pay .