One thing the Fair Tax proponents never seem to discuss is the psychological disincentive a massive sales tax would have on the economy. Most people, intentionally, have no idea how huge the tax burden really is. The Fair Tax would certainly make the tax burden more apparent, but what impact will a 23% (most likely much greater) sales tax have on the market? I can only speak from personal experience, but I would be less inclined to spend if everything had a 23% tax on it (even if my take home pay was larger). Perceptions are important. Right now, the tax burden is hidden.
The so-called Fair Tax would require an agency double the size of the IRS just to monitor all the zillions of little businesses and products sold all over the country, and the world.
Would foreign products be taxed? And can we trust foreign governments to fork over 30%.
Do we add another 30% to gasoline? That sounds swell.
Under a fair tax, there would be a huge underground economy within a year.... that would put any current underground economy to shame.
I don't know about you, but I think that stinks.
The other psychological issue that will sink the Fair Tax out of the gate is the inequity. The chap bastard down the street who makes his kids wear second hand clothes and such pays no tax while the rest of us have to choose to live like him or be saddled with the burden of supporting our military, veterans and roadways. He gets to enjoy those benefits for free while those of us supporting the economy get stuck with the tab.
It is legalized tax evasion, an the sad thing is, if you read enough of the things said by the FTers it is obvious. Look at the points they stress, keep all your money, “choice” , the prebats etc.
I disagree. I sing that from the rooftops. Ignorance of the true tax burden is PRECISELY what has allowed the Federal Government to grow and welfare programs to multiply. The Fair Tax is superior to all other proposals precisely because it makes the total tax burden painfully obvious to all....even those and especially those who erroneously believe they pay no tax.
Jean Baptiste Colbert said: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” The income tax, entity level taxation in particular allow the government to tax without our knowledge.
And one thing the Fair Tax opponents never seem to discuss is the psychological incentive a massive pay increase would have on the economy.
Working people would get about a 30% increase in take home pay with the Fair Tax, before the prebate.
It would be great to have a tax system that enourages savings and investment rather than buying things. Real wealth comes from saving and investment, not spending.
The reason there is no discussion by proponents of the FairTax about a disincentive for people to spend money on new purchases is that there is no disincentive to purchase when the costs will be about the same as they are today under the income tax system, which is by the way almost identical to the 2nd plank of the Communist Manifesto. A progressive graduated income tax, which Russia even dropped on Jan. 1, 2002. Under the income tax, all goods and services carry an embedded corporate tax compliance cost which averages approximately 22 cents on every dollar we spend for goods and services today. This would be referred to under income tax terms as a 22% tax inclusive rate; while the FairTax is a 23% tax inclusive rate.