Since I will still have to prepare state income tax forms, I'll still have a compliance cost. I'm unaware how regulatory costs would be affected by a "fair tax".
I do know that anyone who created a Roth IRA would be screwed, since all the money that was supposed come out tax free would now be taxed.
Since I will still have to prepare state income tax forms, I'll still have a compliance cost. I'm unaware how regulatory costs would be affected by a "fair tax".
You will note that state income taxes have been predicated and founded on the Federal Tax system, state income taxes are highly dependant upon the national law's existance and the IRS infra-structure supporting those laws.
With repeal of the federal income tax, most states will find it much more cost effective to go the same route as the NRST collecting their taxes in parallel with that system. In doing so the taxbase is double of what the income tax base is and the state tax rates on sales would about half of where they are now, covering revenues from state income taxes would bring state tax rates up to where you now see them.
The NRST is one big incentive for states to replace their own income taxes along with the federal move to do so.
I do know that anyone who created a Roth IRA would be screwed, since all the money that was supposed come out tax free would now be taxed.
They are taxed under the current system now. Just through the back door in a way you don't see it.
Read:
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
No. Folks who put $ into Roths will spend the same on taxes if we have an nrst or an income tax.
Today's prices contain a tax costs component of about 25%. It just isn't printed on any receipts. The nrst is about the same amount - and replaces the invisible tax.
There will be no change in purchasing power for Roth owners... they'll get exactly what they've always expected - but they'll receive their full paycheck with no federal deductions, they'll pay no payroll tax, they'll pay no tax on SS benefits, all their investments will grow tax free, and they'll be no death tax nor will their be a gift tax anymore.
Take a look at a short FAQ page and you'll smile.
"Since I will still have to prepare state income tax forms, I'll still have a compliance cost."
Incorrect. Few, if any states will continue to tax income once the federal government abandons the system that state income taxes piggy-back on to.
"I do know that anyone who created a Roth IRA would be screwed, since all the money that was supposed come out tax free would now be taxed."
Anyone with their Roth money invested in stocks will see the value of their investment increase dramatically. That will more than offset any differentials in their taxes on consumption. Also, to the extent that they buy US produced goods, they will pay about what they would have under the current system. Retirement savings will fare very well under the FairTax plan.