Can anyone give a brief overview of the benefit of the fair tax verus the flat tax? I think one downside of the fair tax is it does open the door for both income and sales tax at the national level (cynical though that view may be), while the flat tax retains only income tax, albeit at a better rate across the board. But I'm no expert.
I think one downside of the fair tax is it does open the door for both income and sales tax at the national level (cynical though that view may be)
Door is just as open with the Flat Tax or even the current income tax system. There is absolutely nothing but the American voter standing in the way of Congress enacting sales taxes on top of income taxes now.
With the FairTax the all federal income and payroll (SS/Medicare) taxes are repealed with the FairTax put in its place. No overlap, a straight replacement of one for the other.
If their is enough voter interest in getting rid of the income tax and replacing it with a National Retail Sales Tax. There will certainly be enough voter concern to keep the income and payroll taxes of the books while the repeal of the 16th amendment goes through the ratification process.
while the flat tax retains only income tax,
There is no impediment to enacting a additional sales tax in any flat tax proposal, in fact the
albeit at a better rate across the board. But I'm no expert.
How do you figure a flat tax has a better rate? The flat tax does not repeal payroll taxes, thus the flat tax marginal rate is at least 17%+7.65%= 24.65% on wages for the House version, and as much as 20%+7.65%=27.65% in the Senate version of that tax system.
That by the way does not include the fact that the flat tax is also levied on all business income as well as business half of payroll taxes meaning those taxes get passed onto the customer in higher prices or lowered wages as well.
Furthermore, the flat tax is just the same ole garbage the current system started out at with a much lower rate besides. Didn't flat didn't survive a single term of Congress, and grew into the 60,000 page monstrosity of tax code we have today.
As far as complexity of taxes going away with the flat tax, IRS is still around to make sure those postcard returns are acurrate and truthful. In fact in a more virulent from with extended powers as it no longer has the detail to work with in tax returns to validate information with that it has in the current income tax.
All in all I would say the Flat Tax, is same ole' scam the income tax has always been, a way to buy votes and devide the electorate, rich vs poor.
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
"Can anyone give a brief overview of the benefit of the fair tax verus the flat tax? I think one downside of the fair tax is it does open the door for both income and sales tax at the national level (cynical though that view may be), while the flat tax retains only income tax, albeit at a better rate across the board. But I'm no expert."
The current system is a flat tax many years removed. It is inconsistent with our constitution, which is why the 16th amendment had to be adopted after the Supreme Court struck down an income tax in the late 1800's.
There are a number of serious economic problems which are contributed to, in varying degrees, by our horribly inefficient and antiquated tax system. Among those problems are
1. our enormous and growing trade deficit,
2. our federal budget deficit
3. the looming insolvency of Social Security and Medicare
4. the huge and growing compliance costs and the economic drag that places on all of us
In some cases, the flat tax addresses the problem, but does so less effectively than the FairTax does. (Ex: # 2 & 4 above)
In other cases, the flat tax represents little, if any, improvement over the current system. (Ex: # 1 & 3 above)
That is the "Cliff's Notes" answer to your question.
One other point - if there is one thing which should be obvious by now, it is that globalization is a huge economic force that is changing our planet economically and that those changes have just begun. Sticking with a tax system which puts our producers at a disadvantage in the global economy is a luxury that we can no longer afford. That is what both the flat and progressive income and payroll taxes do. Their day is past and the sooner we recognize that, the better off we will be.
The FairTax bill (HR25) repeals both the income tax AND payroll taxes early in the bill so there will certainly not be both together.
Here, though, is a link to comparative features of different tax systems (note that there are 2 pages):
http://fairtaxvolunteer.org/pdf/Comparison_Chart.pdf