What does the Fair Tax accomplish ?

Question

How is it different from an income tax ?

Answer 1

It's a huge (30% or more) Federal sales tax. It would be a nice tax break for the wealthy but the poor and middle class would be clobbered by it. It's a common misconception that the wealthy spend all of their money. They don't, they hang on to it and grow additional wealth.

As currently proposed there are massive potentials for fraud in several areas, including the so-called "prebate" feature (it isn't paid at a flat rate) and black marketing activities in an attempt to avoid the tax.

If you think it's a good idea, consider that if you bought a new $200,000 home, you'd pay AT LEAST an additional $60,000 in tax on top of the price of the home. Or if you bought a new $20,000 car, you'd pay an EXTRA $6,000 just to get your tags, on top of the taxes and fees you already pay. Good idea? I don't think so!

Answer 2

The Fair Tax is the ultimate regressive tax. People who live from hand to mouth pay a much higher percentage of their income in taxes than those who live off investments. People who make so much that they can afford to squirrel 1/3 or 1/2 or more of their income into banks and investments get richer and richer.

All the 'conservative' tax plans have this feature--to eliminate progressive taxes and replace them with regressive taxes. The current conservative thinking is that it is somehow -immoral- to tax rich people, that they should ride on the backs of those who work for a living. Even today, taxes paid mostly by the well-off, like capital gains and inheritance taxes are considered -bad- somehow, but income taxes and SS taxes are okay.

The Fair Tax is the ultimate expression of this philosophy. The more you can put away, the more tax you save. You don't even pay tax on the money your investments make! So the rich get richer and richer while the middle class carries the main load of taxation.

Answer 3

The Fair Tax is a consumption tax, so your income isn't affected by withholdings and all that. There are some details about income levels and wholesale costs -- but generally, the more you spend on things, the more tax you pay. It's an interesting idea.

Answer 4

What's the definition of "fair"? Would you say that the amount everyone pays for taxes right now is fair? The rich already pay the majority of taxes and democrats only want to tax them more, is that fair?

Answer 5

It accomplishes its main goal.....to transfer more of the tax burden from the upper class to the middle class.