I'd like to put my take on fair tax since its a very strong belief among many fellow ATSers on here and is a corner stone to the advocates for ending
the IRS, or the "FED". I have not read too much into this but Iv managed to gain the basics to what fair tax really is and what it stands for. Might
I say I am very concerned for something like this if it was to be implemented and I have reasons that I would like to bring up to fair tax proponents
over here. Ill first give the definition for fair tax:
The FairTax is a proposed change to the federal tax laws of the United States that would replace all federal income taxes with a single
national retail sales tax. The plan has been introduced into the United States Congress as the Fair Tax Act (H.R. 25/S. 296). The tax would be levied
once at the point of purchase on all new goods and services for personal consumption.
In other words ending the income tax, social welfare, medicare, and placing that tax on goods and services. Sounds great right? Well no not to me.
Although it should be noted many advocates claim its just changing the tax system, but the goal here is in part to end the need for social welfare and
First of all, your merely moving the cost of taxes from one place to another. Essentially all taxes will be placed on goods and services, so that
$30,000 chevy you always wanted would be increased to $40,000. Your paying the replacement, moving your cash earned around, and even though you now
have a choice to spending, your ultimately paying the same burden. But hold on did I get something wrong? Thats a 30% increase, not a 23% increase!?
Well actually this is the biggest mistake folks make regarding fair tax, they assume that 23% equivalence to taxes will be just that... a 23%
increase.... but thats wrong. The real tax rate proposed that would replace sufficient funds rivalling the then obselete income taxes would be 30%, so
your paying nearly a third extra for that Chevy you always wanted.
Now folks may think now that because they are not paying taxes, they will get to paying that Chevy off easily. Well another aspect fair tax does not
take into account is the fact the proportion of the products we purchase and the nature of them aswell. For example, larger luxury purchases such as
houses or cars will cost the tax payer more under fair tax than if they were to be on income taxes. That is, fair tax does not take into account the
major purchases in our life times. Fair taxes only really take into account the smaller minor purchases from day to day where we pay an extra 30 cents
for bread. Saving for that house over time would be less costly and time consuming if not under the fair tax system. In addition, we cannot avoid
purchasing goods and services from a day to day basis. Sure, if your the "colonist" type, living off the woods, you could avoid the costs of taxes
in the commercial world, although thats unlikely for most of us. We depend on goods and services, and under this fair tax system, by the least, we
will still bear the burden of taxes under the fair tax system as we did under the income tax system. It will not be any more different, other than the
fact you get to choose to live off into the wilderness and not have to pay taxes. As much as having merely that "choice" it wont make a difference
to the vast majority of us.
There is something else significant that proponents of the fair tax have not taken into account. The cost of products itself. As much as we could
argue the end to income taxes outweigh the increases in the cost of goods and services we are missing out two key factors here, tourism and
international sales. American businesses would loose out significantly under the fair tax system, in particular those in the tourism industry. The
increase in cost of goods and services may verywell drive tourists away from spending in this nation and creating cash flow.
Tourism accounts for $122.7 billion dollars a year to the economy, and this will greatly suffer under the new fair tax system where by many
businesses, in particular small businesses will suffer. Lets not forget our own people, crossing the borders of Mexico and Canada themselves for the
sake of purchasing cheaper products. I tell ya under this tax system Id be willing to take a 6 hour drive north across Indiana and Michigan into
Canada just to get cheaper goods, and I wont be the only one. This will loose the country more billions out of the economy.
In addition the sales of US goods internationally will greately suffer. Sure, the prices can remain the same for international sales when
transitioning from income taxes to fair taxes however lets take into consideration the cost of running these products in the US, the cost of
employees, the cost of resources, materials, that will increase by nearly a third under the fair tax system will cost businesses who attempt to sell
their products across international lines. Remember that the rest of world has no existence of fair tax, so the conditions for american businesses
will greatly negative.
Businesses will loose out in the international market and competing with the likes of China, India and Russia will be more so complicated. Unless
businesses plan to end their investment in creating fully american products, in place for cheaper resources overseas just to keep up with the
international market, businesses will loose out. And if folks think "patrioitsm" will make these business owners consider otherwise, forget about
it. I dont blame the employer for moving his business base down to mexico to benefit more from the new fair tax system, however our economy will end
Lastly, I think the biggest reason of all, replacing the IRS. There will nevertheless be another agency to handle the fair tax system of these United
states in place of the IRS, this is inevitable, and will in place make that agency the scorn in place of the IRS, and so begins another cycle of
replacing the unconstitutional fair tax system with another system in 2033.
The thing that most gets me regarding the understanding of this system is that the advocates have not seen this system in place. Is it any wonder why
the turn of the century, the 20th century, placed income taxes? Folks cite how wonderful of a time things were before income taxes, as if any of them
even had their parents born in that era, which was nearly a century ago, accounting for the conditions during the 19th century with 21st century
needs. Is this really a wise comparison? At the beginning of the 20th century we had some 90 million folk, still a large existence of resources in our
land, we were still had land needing settlement and lastly the military expenditure was a fraction of the worlds during that time. Today we have some
300 million folks, limited resources military expenditure half that of the worlds with the same adovates for this fair tax pushing for stronger
defense, the every aging population and the costs of our involvement globally. Not to mention, in all that time since the implementation of the income
tax, never once was the fair tax place forth into any state of faction in the United states. The "fiscal" conservatives looked up to such as Reagan,
bush snr never dared implement the fair tax at a time their popularity and power were at the highest. Do they know something fellow conservatives
dont? Or will we be applying another conspiracy theory to that to compensate for further pro-fair tax argument?
I would like to hear these concerns responded to from fellow ATSers.
[edit on 20-6-2009 by Southern Guardian]