You can give money away tax free under the fair tax. Not so under current tax law, except for limited amounts each year.But what happens with the receiver purchases things with the gift? It's taxed.
Not so. Most individual's investments are in tax deferred retirement accounts. This money is taxed as ordinary income when it is pulled out under current tax law.But retired people under the income tax are taxed at a much lower rate than they would be under the FairTax. In 2002, the median effective tax rate on the elderly for the taxes the FairTax replace was 5.4%. That's significantly less than the 23% FairTax rate.
Wrong, you can't buy $10,000 worth of stuff because you have to pay sales tax (unless you live where there are no sales taxes). Also, if you buy gas, tobacco, etc. there are taxes that are built into the price (federal and state).
With the FairTax, if I get a $10,000 gift, I can only buy $7,700 worth of stuff. It's real value is $7,700.
Unless you buy pre-owned goods, then you pay no taxes. Also, if you deposit the money into an interest earning account under the current system you will pay taxes on the interest, but not under the fair tax.
I still have a choice where to spend my money to save taxes.
"You really need to understand real values. Today, if I get a $10,000 gift and pay no income taxes on it, I can buy $10,000 worth of stuff. It's real value is $10,000. With the FairTax, if I get a $10,000 gift, I can only buy $7,700 worth of stuff. It's real value is $7,700."
Of course, you ignore the fact that if that $7,700 worth of "stuff" were produced in the USA, it would have cost approximately $10,000 under the current tax system.
"That's significantly less than the 23% FairTax rate."
As you know the EFFECTIVE rate of the FairTax only approaches (but never quite reaches) 23% only for relatively high consumption levels. In fact, those consuming exactly at the poverty level will have a 0% effective rate - and that doesn't count the benefit of seeing pre-tax prices of US produced goods decline. In effect, there is an INCREASE in purchasing power up to the poverty level.