The flat tax is “resource-allocation neutral”, which means that it has less allocation affects than the current tax. Current tax policy is designed to not only raise revenue, but also to encourage/discourage certain types of behavior (e.g., solar subsidies, cigarette taxes). The Fair Tax scares me because the “prebate” lets the politicians use the back door to get their hands on (and screw up) tax policy...again. Also, if you must pay a flat tax, it means everyone who works “has something in the game.” With 51% of the population currently paying no taxes, they vote for all the freebies they can get.
posted on 05/04/2012 8:36:30 AM PDT
I fully agree with your rationale with regard to the 51% and the so-called “Fair Tax”. Interestingly, the flat tax (if by that we mean absolutely no deductions, no exemptions, no credits) was essentially how the current tax system began. Over time, however, it morphed into a social steering mechanism favoring home ownership, charitable giving and other “preferred” behaviors. It also began to recognize the burden grandma’s glaucoma placed upon her versus the young man who made identical income. Would you leave any of this in place? If not, how does one sell this to the nation? If so, who and how do you decide?
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