The chief fear of those who are running for political office about the “fair tax” is concerns about the “poor” getting hit.
I want a flat tax, preferably somehow tied to consumption of government services, but at least on consumption instead of income, profit, investment, and other useful things. Not only is there no good defense of progressive taxation, there isn’t any reason rich people should pay more in an absolute sense, even if the rates are equal. Not unless you subscribe to the “from each according to his abities, to each according to their needs” philosophy.
I wrote an article on this subject that Liberty was kind enough to publish in their April 2003 issue. It’s entitled “Why Tax Reform Doesn’t Reform.” Here’s the link to the archive. http://libertyunbound.com/archivesearch?date_filter%5Bmin%5D%5Byear%5D=2001&date_filter%5Bmin%5D%5Bmonth%5D=1&date_filter%5Bmax%5D%5Byear%5D=2004&date_filter%5Bmax%5D%5Bmonth%5D=1&type=liberty_print&keys=Welber
We actually had a flat tax, or at least the best one that our congresscritters could come up with. It was called the Tax Reform Act of 1986. It was flat, but it was not simple.
I think the Fair tax is more saleable to an ignorant populace but personally prefer the simplicity of the flat tax. I would gleefully accept either as a replacement to our current system.
Great find, Kaslin! Thanks for posting!
OKEYDOKEY FairTaxers, here is your chance to promote the FairTax.
Have at it!
My contribution: The Flat tax is still an income tax, and it does not rid the USA of the evil Internal Revenue Code or the Internal Revenue Service. People with guns will still take your earnings under cover of “The Law.”
Why don’t we replace the income tax with a National Retail Sales Tax, abolish the IRS and restore FReedom to the American people?
Fellow FReepers, the issue is FReedom, and there can be no FReedom in the USA so long as we have an income tax and an IRS!
For more information about the FairTax and to find out how you can help us, go to http://www.fairtax.org.
How many times does it have to be said that the Income Tax started out as a ‘Flat Tax’ and is always changed into a graduated series of ‘flat’ brackets that are tinkered with by politicians and IRS?
The first income tax in 1861 signed into law by President Lincoln was flat.
That tax and subsequent taxes were changed into more graduated income taxes and were shot down by the US Supreme Court until the worst President in US History Woodrow Wilson was able to push through the 16th Amendment allowing for the uniformity in indirect taxation to be sidelined by income however defined from whatever source.
The original tax provisions of the US Constitution had only one flaw: ‘the disproportionate burden’.
I was surprised to talk to a man now 43 years old from Lithuania who was raised in a communist family in the old Soviet Union and he raised the issue of the disproportionate burden argument before I broached it. Obviously this was taught in Soviet schools.
Another time that I saw someone raise the disproportionate burden issue was in a response letter from the office of US Senator Patty Murray where they raised it as a reason for sticking with the US Income tax.
The disproportionate burden argument has existed at least since the time of Daniel Boone.
But here is the bottomline, the FairTax eliminates actually eviscerates the disproportionate burden issue that was the only flaw if the original tax provisions of the US Constitution. If any amendment had needed to be passed in US history regarding taxation it would be a FairTax Amendment, not an income tax and not a straight sales tax but the complete FairTax package. In 1913 passage of a FairTax was not possible because the administrative technology and ability was not there. The income tax following on the heels of the 1913 16th Amendment was a Flat Tax on mostly the 2% of the wealthiest Americans.
The problem with the Flat Tax is.. it’s still a Tax on “income”.
As long as we tax income, we HAVE to have a definition of what IS, and ISN’T “income”... Hence, you will always have an IRS, a lengthy tax code, and loopholes... maybe not so many at first, by they will pass them every year... forever, until we’re right back in the same boat.
Taxing sales DRAMATICALLY reduces the number of people the IRS has to audit. (It will NOT go away... tax compliance will remain a challenge). But, the vast majority of us will have ZERO contact with the IRS. And they will have a LOT LESS information about our private lives.
I favor the FairTax, as it taxes consumption not productivity and your taxes truly ARE voluntary! I don’t like the “prebate” but I understand why it is there. And, unlike most folks I understand how and why the tax percentage is calculated.
But otherwise, the answer is “Yes.”
Flat Tax, with a few points:
1. Everyone gets a deduction on their return, maybe $5,000.
2. Every legitimate dependent claimed (such as children/spouse/old relatives) is an additional ~$1,000 deduction. They do NOT get their $5,000 deduction.
3. Flat tax of, say, 10 or 15% of the remainder.
4. Check box for whether you want withholding or not the following year.
Of course, within a few years we could make it even better. Eliminate the 17th Amendment, as well as the large majority on non-Constitutional spending from the feds. Then, take the year’s budget, and divide it by 636, with each Senator and Rep (plus DC’s) taking home an equal share of the budget. Their state can then decide how to tax it’s citizenry and pass it on to the upper Gov’t.
Why do those that denigrate a “sales tax” always somehow base that on a fear that “we will have both” and then immeditaly try to claim it is the same as a VAT? While advocating a flat tax and claiming it will not lead to the results we see today?
First, we started with a flat tax, so it is safe to assume that re-setting to a flat tax would result in a progressive system in a generation or two.
Second, a VAT is even more evil than the income tax. It is hidden in the cost of goods and hidden from the tax payer. It also compounds in the supply chain so that a 5% VAT could very well increase the cost of goods by 20%.
A sales tax, and I do like the “Fair Tax” proposal, would be open and honest with every voting citizen. Every person would see the cost of their government with every transaction. If we want to reduce the size and scope of government, hitting every voter over the head with a 30% National sales tax on every purchase would work wonders!
The one piece I do not like is the prebate check, but I do understand the political need for it...
Income tax started out simple and fair too.
Any simple and fair system is simple and fair - the problem is what mutations politicians inflict thereon. The biggest problem I see is how sales taxes start with tendrils into every single transaction; better to not give the gov’t such deep data mining powers from the start.
Because FairTax no longer taxes the very process of earning money, that means the USA would become one of the most business-friendly countries on Earth, period. And that would means easily cutting the unemployment rate to around 5% (based on the 2008 Department of Labor definition) pretty easily--5% is essentially full employment level.
Neither.
Flat tax: Feds should not be taxing citizens directly.
FairTax: don’t conscript business into being tax collectors, esp. in states that have no sales tax. And don’t give the Feds a way in to POS data-mining - you’ll regret creating that monster (far worse than the one from Jekyl Island).
Send each state a bill and let ‘em figure out how they want to pay it. IRS should be two guys printing bills and cashing a few dozen checks for a few days a year.