Fair Tax????

Question

What are the down falls/benefits of the fair tax??? Why wouldn't work?? all income tax is removed and the only taxes is on what u buy. People could save more money because you are getting all the money you earn.The government will get the same amount in taxes, and plus no IRS .

Answer 1

The proponents say that a tax of 23% would be enough to fund the government. Opponents don't agree, and feel the % would be much higher.  And even by the proponents’ calculations, the 23% is the % of the total price of something that would be paid, which calculates to an add-on of 30%.

Each family would get a "prebate" each month to cover the tax on an amount equal to the poverty level.

This is a real good deal for the rich, since as a group they'd pay a lot less tax than they do currently. For the poor, with the prebate they might come close to breaking even - unless they are currently getting EIC or other benefits that wouldn't exist any more under this plan. The middle class would pretty much get the shaft, especially those with kids who now get child tax credits and maybe EIC.

Fair? Well, that's a matter of opinion.

Then of course there's the little matter of pretty much desroying the auto industry and new home construction, since why would anyone buy something new and pay this huge tax rather than buying used and avoiding it.  That's a lot of jobs lost!

And the people who say there would be no IRS gloss over the fact that SOMEBODY has to administer it.

Answer 2

No IRS.  Ha Ha Ha!  Who are you trying to kid?  Who would administer Fair Tax?  The Coast Guard or the Park Service?

It would just shift the burden around.  Some people would pay more, others would pay less.  You would probably pay more.

Answer 3

I prefer a flat tax.  Every citizen pays the same % of their income.

And for those that feel bad about low-income families or the folks with kids.  I don't feel bad.  They should pitch in a % of their income to the government just like everyone else - they utilize the same (and sometimes more) of the services that I do - , and they shouldn't be getting all their paid in taxes back PLUS a portion of my taxes that I pay.

Answer 4

If by fair tax you mean a tax like a national sales tax instead of an income tax then it will disproportunately hurt the working poor.  Under our income tax rules people who make less that a certain amount of income (the poor and the low income) pay no tax at all and people who make high incomes pay a greater percentage in taxes.  Under a national sales tax, everyone would be taxed regardless of income.  That would place a heavy burden on poor and low income people who are already counting their pennies and living paycheck to paycheck and who must spend all of their income on food, housing, and transportation just to get by.  If you take away say 10% of their spendable income with a 10% national sales tax, you will have many, many hungry people who simply cannoyt afford to feed their families every day during the month.

Higher income people, who currently pay the most in income taxes would pay far less under a national sales tax simply because they don't HAVE to spend all of their income every month to survive.  Their saved (unspent) money would become essentailly tax free income.

Answer 5

Let's look at the last point first.  If the Fair Tax were inenacted as currently envisioned, it would replace one taxing agency with 51+ taxing agencies, each with its own set of procedural rules and its own interpretation of the law.  How is that a good thing?

People could save money.  I assume you mean that could save money unreduced by an income tax.  They can do that now by means of IRAs, 401(k) accounts, etc.  Most people do not use them now, so I doubt savings would increase much under the Fair Tax.

The Fair Tax would shift the tax burden from the rich, who grumble but otherwise handle the burden well, to the middle class.