You make good points.
“How much did you make?” can be determined by looking at your W2(s) at the end of the year. And that is how much you pay the tax on.
No withholding, no quarterly estimated taxes, no deductions, no need to track mileage, etc.
One situation I see that would have to be handled is municipal bonds which, now, are tax exempt.
The need for collection and enforcement would still exist but I would guess 90% of the taxing authorities would disappear.
If the Fair Tax could figure out a less complicated way of calculating the tax and a different way of doing the prebate then I think the Fair Tax would have a shot.
Truth be told, though, any tax scheme which takes power away from the government and reduces the number of people employed in the “tax/government” complex hasn’t a chance in Hell of being enacted.
It's not that simple at all. If it were, we would be doing that now. But it's much, much harder to define income to be taxed than simply looking at a W-2.
W-2 is only wage income. What about imputed income from employee benefits for example? What about dividend income? Sale of stock? Bonds? Inheritance? Rental income? Commissions? All of those are examples of income that do not show up on W-2s.
Any income tax has, at its core, the problem of defining income. It is the main problem. So a system that simply reduces the number of marginal rates from 4 to 1 doesn't do much. Income still has to be defined along with all the accountants, lawyers, and government intrusion that comes with it.
If the Fair Tax could figure out a less complicated way of calculating the tax and a different way of doing the prebate then I think the Fair Tax would have a shot.
The fair tax is simpleton to calculate. If you want a way to figure out the price after tax, just add 30% [at the proposed rate]. That's easier than figuring your net effective tax rate on income by a good measure!!!
Regarding the prebate - we agree that it's something we don't like - but maybe for different reasons.
You didn't say why you didn't like it. Me, well, i'd rather forego the prebate and lower the rate. If States want their peeps to have a refund on necessities, let each state figure that out. JMHO