re: #509 Obdicut

It is a terrible, horrible, absolutely ridiculous idea with no merits to it and a hell of a lot wrong with it.

Quick look at what’s wrong with it:

1. By loading so much tax burden onto sales tax, the tax becomes massively regressive. If you ‘prebate’ to the extent that the poor are covered, then this cost falls mostly on the middle class. This is something the Fair Tax afficianadoes will actually admit when questioned hard enough: The Fair Tax moves the tax burden to the middle class, and benefits the very poor (if there are rebates) and very rich.

2. The things with sales tax on them would be massively increased, including services. There is no real flat tax proposal out there, but most of those making a pretense towards reality tax things like medical care, music lessons, getting a roof repaired, etc. Most importantly, houses and rent would also have this tax applied to it.

3. Because new things are taxed and old things are not, a shadow econmy/black market would spring up and consumption of new things would decrease markedly.

4. A gigantic new bureaucracy. They get rid of the IRS and replace it with state agencies collecting sales tax. This means that instead of individuals and their income being tracked, millions of small transactions will be tracked; like the current sales tax system, but with a much larger benefit from avoiding it. This means we’d have to have a ton of investigators.

This article pretty well sums up why the Fair Tax is glibertarian bullshit:

[Link: www.factcheck.org…]

I don’t think it is quite that simple. I’m not a proponent, just reading the article you and killgoretrout linked.

We stand behind our earlier analysis of the FairTax. The proposal to which Gov. Huckabee referred is not a 23 percent tax, but rather a 30 percent tax. And it is revenue-neutral only through an accounting trick. It will collect more money from those earning between $15,000 and $200,000 per year and less from those earning more than $200,000 per year. It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair.

factcheck.org