I’d encourage you to read the entire article, which points out just how unworkable the Fair Tax is. The tax rate would have to be ridiculously high and apply to all manner of goods and services. It would even result in the federal government taxing itself. Pure nonsense. The private sector retail sales base is simply too small to support a Fair Tax as a replacement for the current income tax.
Better yet, read both, the book and the article. At first blush I did not subscribe to Linder and Boortz’s idea. I always thought such a thing would give too many opportunities to the black market. But seeing the details has not totally sold me but it is palatable as in the which is worse arguement.
Be mindful the WSJ is written for the financial community and that group is home to all the tax preparers, attorneys, accountants, et al who would be displaced by the FairTax. One article is not the sum total of all points of truth in reality for any issue since that paper has a vested interest in making sure everything stays the way it is.
The profile of this article is high enough that I’m sure Boortz will spend a great deal of time with it on his radio show tomorrow. You should listen and read his book. As I said, it is much better than the current system, but scruitiny is still required.
You mean, like taxing the income provided by Social Security checks?? No way OUR government would do anything THAT stupid!
I did read the entire article.... and, I think most of it is hogwash. Economist on BOTH sides of this are grasping at straws due to the complexity of the calculation required to understand the impact of such a massive change... I think, it's probably impossible to do.
For example: The article intentionally scares the reader by raising the example of having to pay a 30% tax on the purchase or a house... or car. What they don't say is.... the CURRENT price of a house or car includes substantial costs for.. guess what?... income taxes. Under the Fair Tax, primary producers are exempted from taxation... so, the COST of nearly everything will be greatly reduced.
Here's the test... My family is, fortunately, fairly high up on the IRS wage scale... yet, my final federal tax bill is only ~ 20%. If the Fair Tax is SO REGRESSIVE .. meaning lower and middle income people are going to pay so much more... how would my tax rate be increasing by 50%?? It just doesn't make sense. If so.. the government will be buried in money.
The article did, however, point out a serious flaw for me. This rebate based on income means... people will STILL have to prove their income!! Not having to do THAT is the whole point behind the Fair Tax. The better way to reduce the regressiveness of the tax is to exempt food. Lower income people spend a much higher % of their income on food.
Until this problem is corrected, I guess I do NOT support the Fair Tax as it is currently written.
In all the past FT threads I have never read a defense of the current progrssive income tax system, of why it is better for America than the FT.
I will not likely read one today.
“I’d encourage you to read the entire article, which points out just how unworkable the Fair Tax is. The tax rate would have to be ridiculously high and apply to all manner of goods and services. It would even result in the federal government taxing itself. Pure nonsense. The private sector retail sales base is simply too small to support a Fair Tax as a replacement for the current income tax.”
I think that we may have found someone that pays little or no income tax.
That means the tax rate is ridiculously higher now. The nrst has both lower marginal rates and lower effective rates on spending than the income tax rates on income. Your argument is self defeating. If the revenue neutral rate would have to be high, then today's rates are even higher - yet you do not oppose today's even higher rates?
... and apply to all manner of goods and services.
Today's even higher rates already apply to all manner of goods and services. You have fallen into the trap of comparing PRE income tax prices to POST nrst prices.
Of course if you want to compare the effect of tax systems on prices, you have to include the effect of tax on prices... in both systems.
Example; I buy a service from a dentist. Today, I write the check for payment of $100. That sir is the PRE income tax price. To determine the after tax price, apply the exclusive income tax rate to the price. I'm have a 25% total effective income tax rate - so my after income tax prices is $133.
Compare now the after nrst price....
The dentist's price drops first due to elimination of tax costs to $91 [a 9% drop stipulated by themost vehement anti nrst people]. THen, add the full, marginal nrst to arrive at $118. Note here that I'm using the higher marginal rate, not the lower effective rate.
Under the income tax, pre tax price is $100.
Under the nrst, pre tax price is $91.
Under the income tax, after tax price is $133.
Under the nrst, the after tax price for me is $118... using the full marginal rate. My actual after tax price will be less because the full rate is the rate paid by individuals who save zero dollars, spend 100% on taxable items, and who choose not to accept their rebate.
I won’t go swiming, because there may be an alligator in the pool.
“I’d encourage you to read the entire article, which points out just how unworkable the Fair Tax is. The tax rate would have to be ridiculously high and apply to all manner of goods and services. It would even result in the federal government taxing itself. Pure nonsense. The private sector retail sales base is simply too small to support a Fair Tax as a replacement for the current income tax.”
Maybe the size of government would have to fall? If people knew how much they paid in taxes they might want a smaller government.
I read the article. I suggest you read the FT book then tell me why the current system is better for the US.
“federal government taxing itself”
Sophistry. Federal contractors pay income taxes as well. No difference than with the FairTax.