“You really don’t have a choice about the taxation either way. You have to work to earn income to eat. If your work is a service, it is taxed. No difference between that and the current income tax.”
If your point is that you have to pay taxes somewhere in the economic cycle under this proposal (or any proposal), and that that means there is no difference, then that is your opinion and you are welcome to it. However, from an economic perspective, there are enormous differences.
The main reason that I support the FairTax is that it is the most comprehensive and effective way of dealing with a broad range of adverse economic trends which are going on right now.
1. The spiral of complexity and higher compliance costs in our current tax system,
2. the trade deficit (and the resultant erosion of our manufacturing base),
3. the federal budget deficit (including the crisis in SS & Medicare)
4. the AMT
5. The rapidly rising costs of health care
6. The declining and now negative personal savings rate
7. etc, etc
What do these trends have in common?
A. They are unsustainable,
B. They are contributed to significantly by the current dysfunctional tax system,
C. Most Americans have no idea of the seriousness of these trends nor of their connection to tax policy.
Health care costs are skyrocketing due to trial lawyers and insurance companies and unfunded mandates from the government to provide free health care to those who can't or won't pay for their services. The manner of collecting revenue has no bearing on either of those behaviors.
The declining savings rate has much to do with being taxed by the government. When you are reduced to subsistence living (paycheck to paycheck), there isn't much left to save. The progressive income tax screws the upper income category so they have less disposable income to spend in the establishments that employ the lower income people. Again, less disposable income means less opportunity to save. If the "fair tax" is actually "revenue neutral" as it claims, the amount of disposable income is theoretically identical. As for taxing the interest on savings accounts, that doesn't really add up to much money. Especially if there isn't much money left to save.
Social security is a Ponzi scheme that is destined to fail by design. The number of persons entering the game is less than those sucking benefits out of the system. That disparity will be growing. A federal sales tax is no guarantee that the problem will be solved. It still comes down to a lopsided distribution with more consumers than producers.
Going back to the single item where I agreed with you, the "fair tax" will require a huge government agency to track millions of taxpayers. Who will enforce the tax collection? Who will decide what is taxable? What agency can disburse over 300 million checks each month? How much does such an agency cost? As a tax collection model, the "fair tax" appears simple, but the shear magnitude of persons involved is going to be a problem. That involvement will need to happen daily.