The FairTax is described here:
www.fairtax.org
Basically, it eliminates all income taxes (personal and corporate) and all payroll taxes, and replaces it with a 30% sales tax on everything. Individual taxpayers get a “pre-bate” check every month from Govco to cover the approximate tax on their necessities.
The upside is that there are no longer any income or payroll taxes. No more hassle with those, no need to file, no more IRS knowing all that stuff, and no more IRS.
There are some big downsides, however. The prebate is nice in theory, but now every household is heavily influenced, or even dependent, on an enormous Govco entitlement program. Central planning Marxists would salivate at this situation.
Also, huge black markets would develop to evade the 30% tax. Every taxpayer would be scheming their brains out to find ways to evade the tax. Underground economies and bartering would flourish. Some would say that’s a good thing, but it would penalize those businesses who would seek to play “fair”, ironic pun intended.
Further, one aspect that I’ve never liked from proponents is that they will tell you that the tax is not 30%, but it’s only 23%. Here’s how they get there: say $100 worth of goods is bought, and a 30% tax or $30 is added, bringing the total to $130. Proponents will tell you that the share of the tax is only $30/$130 = 23%. By similar logic, if the tax was raised to 100%, they would tell you that the effective tax rate was only 50%, because only 50% of what you pay is for taxes. That is disingenuous, and has always made me suspicious of its supporters.
Personally, I’m not a fan of the “prebate” notion, and would much prefer something much simpler and straightforward than what the FairTax proposal contains.
What in H3LL is fair about a 30% consumption tax? Or, as the UN-Fair Tax website miss-leadingly calls a 23% tax...
If I buy a $300,000 home I'm going to pay a $90,000 'consumption tax'? This whole Un-Fair Tax is total BS! I'd have to sell it for $390,000 to get my consumption tax back after I un-consume it...talk about inflation in real estate!
And think about the enormous Gov't waste in the agency that has to manage the 'Pre-Bate' $hit!
This Un-Fair Tax is a lot of smelly stuff that comes out of the Hind-Side of our horses...or from the disingenuous people proposing this stuff!