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I’m a proponent of the Fair tax but I do not believe it’s politically or economically practical to replace our entire taxes on net incomes with a sales tax.
It would be financially imprudent and politically less feasible and may be impossible to pass a bill transferring our entire federal taxes upon net incomes to a sales tax in a single step. I’m continuously told that Fair tax proponents would not support a fair tax bill to be passed and enacted as other than to be accomplished in a single step; the consequences of retaining such a position is the Fair tax bill will never be attempted on a federal level.
Each incremental step for the enactment of the Fair tax should simultaneously:
(1) Reduce individual and corporate regular income tax rates upon all income brackets by a uniform portion of net taxable incomes (rather than reductions of taxes themselves).
(2) Increase the federal general sales tax rate.
(3) Increase the provisions to compensate low income purchasers for the increased sales taxes.
I expect that after one of the incremental steps, we’d have a federal sales tax approaching an unacceptable tax rate and transfers of the revenue sources would be discontinued; if I’m wrong, federal income taxes could be entirely eliminated.
I'm not really concerned with whether It can be done or not, I wonder who benefits? The income tax is the *one* tax we have that is progressive and is primarily paid by the upper class. The "Fair" Tax would tend to shift the burden to lower incomes.
Another important effect is that it gives people an incentive to earn income in the US and then leave with it and spend it elsewhere. I don't see how that is a good thing for our economy at all.
It also wouldn't be hard to greatly simplify our tax code the way it is... just get rid of the myriad deductions. Simple.
Also, charge corporate tax based on US operations. It's insane the BS we let some of these guys get away with by taking advantage of shelters in other countries. If you want to play in the US, then pay.
Simplifying the tax code will destroy the accounting industry.
Destroying unnecessary industries is one way to increase aggregate wealth.
But we can simplify the tax code without a huge Federal sales tax, which will bring a host of other issues with compliance. Just get rid of the millions of deductions and adjustments.
There are a lot of things that I like about the Fair Tax, however, I don't believe that it will ever be passed and enacted.
The reason is very simple. The US Tax Code is perhaps the greatest source of political power ever created. The Code gives politicians the ability to take money from one group of people and give it to another. That power is beloved by both D's and R's, and neither political party wishes to give that up.
Simplifying the tax code will destroy the accounting industry.
"Fair tax" is anything but fair. Flat taxes are highly regressive.
RRuff, it would be imprudent and I would hope it will remain politically unfeasible to pass and enact a single step elimination of our entire federal net income taxing systems replacement by a general sales tax.
Portions of all three of the major tasks required for such enactment should be simultaneously accomplished incrementally.
I’m opposed to reducing income taxes by a proportion of their rates because that would thus be reducing income tax rates progressively dependent upon taxpayers’ income brackets. I advocate income taxes should be reduced by a uniform proportion of taxable income, regardless of the taxpayers’ brackets. Thus I’m advocating simultaneously enacting incremental “flat” reductions of corporate and individual income taxes replaced by increasing a flat rated general sales tax.
The entire incremental reductions of income tax revenue is not reflected within the sales tax rate because there must be also be incremental simultaneous compensating provisions for low income earners that do not pay income taxes.
Each individual step of enactment would consequentially cause less regressive taxation.
All I had to do was read about its "prebates" and other income adjustments, to know that the Fair Tax would be just another monstrosity designed (like the current system of credits and deductions) to control behavior.
RRuff, it would be imprudent and I would hope it will remain politically unfeasible to pass and enact a single step elimination of our entire federal net income taxing systems replacement by a general sales tax.
Portions of all three of the major tasks required for such enactment should be simultaneously accomplished incrementally.
I’m opposed to reducing income taxes by a proportion of their rates because that would thus be reducing income tax rates progressively dependent upon taxpayers’ income brackets. I advocate income taxes should be reduced by a uniform proportion of taxable income, regardless of the taxpayers’ brackets. Thus I’m advocating simultaneously enacting incremental “flat” reductions of corporate and individual income taxes replaced by increasing a flat rated general sales tax.
The entire incremental reductions of income tax revenue is not reflected within the sales tax rate because there must be also be incremental simultaneous compensating provisions for low income earners that do not pay income taxes.
Each individual step of enactment would consequentially cause less regressive taxation.
Respectfully, Supposn
I do not see any way to avoid regressivity under a national sales tax that taxes rent while exempting the purchase of an existing home.
I do not see any way to avoid regressivity under a national sales tax that taxes rent while exempting the purchase of an existing home.
FreeMkt & Delahanty, the purpose of progressive taxation is also advanced when government services equally or more favorably serve poorer persons. Free public education and subsidized public mass transportation are examples of this concept. To some limited extent sales taxes can be drafted to have some progressive attributes.
We should waive sales taxes upon selected items that are a greater proportion of lower rather than higher income earners’ expenditures, or waive taxes upon capped threshold of selected items’ prices, (although the general sales tax has only a single tax rate) those waivers and caps would effectively create a less neutral and to a limited extent a more progressive sales tax; but in the cases of waiving taxes on a capped amounts of a specific item s, that amount should be cost of living adjusted to stay abreast with the cost-price index number.
For example, the sales tax could be waived for mass transportation and for food not directly or indirectly price bundled with restaurants or caterers. Differing threshold of capped billing amounts for residential rents and for individual types of utility products which are delivered by common carrier to an actual residence.
Name me one developed country that has made its tax system simpler, or even more equitable in the last 50 years.
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