One thing that I think is being overlooked in this whole debate is the effect that the Fair Tax will have on overall government policy. When people can see clearly the cost of the government, they'll begin to question why those costs are so high. As the book states, right now, you can ask many people how much they paid in taxes and they have no clue. Many of them will say "Oh, I didn't pay anything - I got some back." even though they may have paid several thousand dollars in payroll taxes. Under the Fair Tax - they will see clearly on each receipt how much of their purchase went to the federal government. THAT is how we will finally see government spending increases come to an end, because people will finally understand how much tax they're paying to keep this behemoth growing. The book doesn't talk about this, but it's an implied benefit of the Fair Tax idea.
Dear RightFighter,
"When people can see clearly the cost of the government, they'll begin to question why those costs are so high."
Oh, heck. Every one of my employees gets a paystub every payday telling them precisely how much they paid for federal income, state income, and federal payroll taxes.
If they can't figure out what they're paying now, I'm a little skeptical that they'll notice much once the NSRT is in place for a while. I also think it's likely that the folks who really have no clue how much they're paying are folks who typically aren't earning much. These are folks who also benefit most from government spending. They won't look for a roll-back in government spending, just ways to shift the tax burden off themselves.
Anyway, I suspect that retailers will advertise the base price in small print, the tax in small print, and the total price, with the tax included, in large print, to make sure that folks don't misunderstand how much they need to bring to the register. If the law permits (and I expect this will be one of the first changes if the final bill does not permit), retailers will only print the final cost, or will be permitted to note the NSRT amount somewhere in fine print. And here's why: because if folks realize how much of their purchase is the NSRT, consumption will fall, and sellers of stuff will suffer. So, the sellers will look to relief from Congress to permit them to conceal the tax.
Anyway, pass the NSRT in roughly its current form, and the next thing you'll have is the liberal demagogues who will rightly note that the rich are doing very well under this NSRT, thank you very much (which is fine by me, but is always something that sticks in the craw of a significant percentage of the population, including, seemingly, many folks here at FR).
And the cry will go up to reduce the burden "on the working man" by raising taxes on the "very rich."
Since the 16th amendment isn't getting repealed before this sucker goes into effect, I expect that the libs will go for a "modest" reinstatement of the income tax on the "very rich," to bring down the NSRT rate, or to exempt food, or medical stuff (or health insurance premiums - in my company, the average health insurance premium is about $10,000 per year - the NSRT on that alone will be $3,000 - ouch), or whatever.
Or, we'll see libs introduce differential rates. "It's supposed to be a FAIR tax! How is it fair to charge poor people the same tax for their new car as rich people? Rich people buy decadent [we've seen that word thrown around on this thread already by alleged CONSERVATIVES] luxury cars. Let's make the NSRT 40% instead of 30% on cars over $50,000!"
Heck, it wasn't tough to get a 10% excise tax on cars over $30,000 under a REPUBLICAN president, along with a 10% excise tax on pleasure boats. People will (probably already have) forget about the disatrous effects on the boat-building industry from that last one.
See, there are two points of view represented in these threads: one that says that human nature will be altered by going from an income tax to a decadence, uh,... er,... consumption tax; and one that says that human nature will not be altered by collecting the same money in a different way.
One view is that politicians will stop being politicians, that people who avoid and evade taxes now will stop avoiding them and evading them in the future, and that somehow, taxing consumption heavily won't suppress consumption.
The other view is that our federal Congress comprises 535 full-time politicians who have to have something to occupy themselves, and thousands of paid lobbyists who are continuously suggesting "improvements" on things to these 535 politicians, to fill their time and give purpose and meaning to their otherwise meaningless and useless lives.
Of COURSE politicians will continue to tinker with the tax code!! LOL!!! What ELSE are they going to do?? Of COURSE lobbyists will develop arguments that sound reasonable to tens of millions of folks on how to make the Fair Tax even FAIRER. How do you think the income tax got to where it is?
As long as you have a honey pot with $2 trillion in it, you'll always draw a lot of flies. And nastier creatures.
And of COURSE, if you tinker with the code to take from the relatively-few well-off, but give a break to the relatively-more less well-off, you will gain majority support for your proposals. That's why the marginal income tax rate once exceeded 90%.
Most folks will think that any proposed change to the Fair Tax that gives them more at the expense of folks who are not like them will be FAIRER, so, why not?
sitetest
Under the Fair Tax - they will see clearly on each receipt how much of their purchase went to the federal government. THAT is how we will finally see government spending increases come to an end, because people will finally understand how much tax they're paying to keep this behemoth growing.
So lets look at what the maximum it would take to fund those functions clearly authorized under Article I Section 8 of the Constitution, in 2001 dollars:
http://w3.access.gpo.gov/usbudget/fy2001/guide02.html#Spending
- $334 Billion --- Defense & Military related expenditure
- $ 31 Billion ---- Administration of Justice
- $ 16 Billion ---- General Government
- $199 Billion ---- Interest on the Debt
=========================
$580 Billion ---- Total
Institute an across the board, Flat rate, single stage National Retail Sales Tax, which taxes all imports and domestic products with the same rate.
Replacing all current federal tax law with a retail sales tax would be 23% on new goods and services paid and receipted at the retail register. No hidden tax, no exceptions, exemptions everyone participates.
Such a tax acts in a natural manner to encourage the elimination of excess government functions through visibility of burden among all constituencies of the electorate.
The total federal government budget would move from $2,000 billions towards something less than $580 billions calculated.
The across the board federal tax rate on new goods and services would decline towards less than 7%.
As tax rate on sales decreases the economic burden on retail items, the sales volumes and growth in the economy would be tremendous allowing even further reductions in tax rates below that less than 7% hypothetical level.
That is what I perceive as the ultimate achievements possible under a National Retail Sales Tax structured in the manner of the revenue bill H.R.25. Simple common sense applied to the principal of TANSTAAFEL,( no free lunch, everyone participates in paying their way in proportion to the benefit the extract from their consumption.) encourages the natural change in attitudes required of the electorate as regards the burden of government largess in their lives.
- It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income
Hmmmmmm....... It's do able, with time and effort, once the blinders are removed from the electorate.
"When people can see clearly the cost of the government, they'll begin to question why those costs are so high."How would they do that? These same people who don't look at their check stubs would just throw their worthless receipts away in the bag they carried it home in.
Besides where would the realization of the huge cost of government be if the Fairtax promise of lower or "about the same as now" prices AND more money in their pocket is true?...Which one is the lie?