In principle I agree with the FairTax. However, in practice, there are a lot of concerns I have about it. First, it is regressive. And in light of the very progressive nature of our current tax system, it becomes ever more regressive, relatively speaking. Plus, what about the effects of any transitions on retailers?
"First, it is regressive. And in light of the very progressive nature of our current tax system, it becomes ever more regressive, relatively speaking."
Incorrect. The FairTax is progressive when measured by consumption levels. Second, the current system is more progressive in theory than in actuality. Many Americans are resentful of the huge tax breaks that they truly wealthy avail themselves of.
For example, when Ted Turner and Jane Fonda were getting their divorce a few years ago, his tax returns were entered into evidence. The Atlanta Journal Constitution reported that for the previous tax year, his income was about $125 million and he paid about $5 MM in taxes.
How many of you would like to have an effective tax rate of less than 5%?