You say that the poor spend less, so are taxed less, but the poor spend a greater percentage of their total income and wealth than those who are "middle class" and the drawback to the middle class paying a sales tax is that much of the wealth of the middle class is tied up in debt so to move towards an exclusive consumption tax is that you force those people with debt, to assume a greater liability of debt.
I support the continued use of the income tax, at about the rates they are at now, but with the elimination of deductions based on twisty turny subsidations that are hidden away in a thousand bills that accomplish nothing.
Let the tax be a tax for all, isn't that the goal of our free democratic and relatively egalitarian society?
You say that the poor spend less, so are taxed less, but the poor spend a greater percentage of their total income
Not under the FairTax legislation, as the poor are fully compensated for the tax they pay on anything less the the povertylevel of consumption.
Instead of opening the political and administrative rats nest of excepting specific items or persons from paying the NRST at the cashregister, the Fair Tax Act(H.R.25) provides what amounts to a personal exemption in the form of a demogrant that all legal residents will receive; a monthly amount called the Family Consumption Allowence(FCA) equivalent to the FairTax paid at the HHS defined poverty level of expenditure. The FCA is paid in advance, in equal installments each month by check or electronic tranfer to bank account from the Social Security Administration.
The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate, and paid to all households regardless of income or actual expenditure. The HHS poverty llevel is a well-accepted, long-used poverty-level calculation based on the cost of a healthy diet comprising 1/3 of total family budget value. The povertylevel statistic is fixed in 1969 dollars updated annually for CPI.
The chart below in Figure 1 tepresents the current FCA as it relates to the 2004 povertyline statistic, adjusted pay a fixed amount for each adult in a household to remove implicit marriage penalties.
| Figure 1: 2004 FCA calculation | |||||||
| Family size |
HHS annual poverty level |
FairTax annual consumption allowance (single person) |
Annual rebate (single person) |
Monthly rebate (single person) |
FairTax annual consumption allowance |
Annual rebate (married couple) |
Monthly rebate (married couple) |
|
1 2 3 4 5 6 7 8 |
$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570 |
$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570 |
$2,141 $2,873 $3,604 $4,336 $5,067 $5,798 $6,530 $7,261 |
$178 $239 $300 $361 $422 $483 $544 $605 |
N/A $18,620 $21,800 $24,980 $28,160 $31,340 $34,520 $37,700 |
N/A $4,283 $5,014 $5,745 $6,477 $7,208 $7,940 $8,671 |
N/A $357 $418 $479 $540 $601 $662 $723 |
[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ]
As an example, under the Fair Tax Act, a family of four with two wage earners paying income and SS/Medicare taxes, could spend $24,980 per year free of tax because they will have received over the course of the year a demogrant totaling $5,745. $5,745 is the amount of sales tax paid on $24,980 in expenditures. That family spending double the "poverty level" or $49,960per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.
The "Fair Tax" IS "a tax for all", and it is as fair and egalitarian as it gets. The whole "progressive/regressive" crap is right out of Marxist economics. The poor will ALWAYS pay a bigger percentage of their "total income and wealth" than those better off--it's BECAUSE THEY'RE POOR.
Taxation is supposed to be about financing necessary government functionality---not "playing Robin Hood" to make bleeding-heart socialists "feel better".