I hope you weren't surprised. He's been stumping for a national retail sales tax for a while.
Instead of making every American family dependant on a monthly government welfare check [family consumption allowance], and ration tax-free basic necessities, why don’t the architects of the so called fair tax simply prohibit taxing the necessities of life [food, shelter, clothing, medical expenses, etc]?
How does the government determine what these are? Do they have a limit of quality or quantity for them? Would Murdoch get his recent $44 million penthouse purchase tax free? Do people who buy lobster and those who buy rice and beans get the same tax deduction? Are fur coats considered clothing? Will Coke and Pepsi rent a few congressmen to get onto the food list?
By far the fairest, simplest, least intrusive and least susceptible to political games is the rebate of taxes on a certain amount of spending. That keeps the government out of social engineering by deciding what are good purchases and what are bad ones. You buy it, you pay taxes on it and you get a rebate for a base amount of taxable spending.
The biggest problems I have with a NRST is how to handle people who have paid taxes on income but lived below their means so they have a nest-egg they would have taxed again when they spend it versus profligate spenders who borrowed tax-free to spend now and pay it back with untaxed income after the NRST starts.
According to a Harvard econ. study, every product you buy has a "built in" tax.ie The cost of complying with tax code, employers portion of payroll taxes, etc. This cost ranges from 20 to 40 percent of the value of the product(food products have a different tax load than say...tires) . With the fair tax plan that cost is no longer needed to produce a product. Competition will quickly drive the cost of products down by that percentage. Thus the person with the nest egg would be paying lower prices plus the sales tax. In the end the total cost would be roughly the same depending on what type of product it is.
Instead of making every American family dependant on a monthly government welfare check [family consumption allowance], and ration tax-free basic necessities, why don’t the architects of the so called fair tax simply prohibit taxing the necessities of life [food, shelter, clothing, medical expenses, etc]?
You wrote:
How does the government determine what these are? Do they have a limit of quality or quantity for them? Would Murdoch get his recent $44 million penthouse purchase tax free? Do people who buy lobster and those who buy rice and beans get the same tax deduction? Are fur coats considered clothing? Will Coke and Pepsi rent a few congressmen to get onto the food list?
ANSWER
Surely there is a clear enough distinction between such foods as caviar and chicken eggs, between wine and milk, between silk and cotton underwear to truthfully say one is a luxury and the other a necessity. I believe in such cases the people’s perception will prevail in Congress to a larger degree and help to diminish the factions crying for “exemption“. But in the final analysis, it is far better to have Congress spend its time selecting specific articles of consumption for taxation as was done inthe first revenue Act of our country
We need to study and get back to our founding father’s original tax plan!
Sincerely,
JWK
Illegals would have to pay the FairTax.