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Legend11 on 03 January 2008
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Andir said:
Legend11 said:

I have a few questions that maybe someone advocating FairTax can answer...

1) Wouldn't this seriously harm tourism dollars flowing into the United States?  I mean since the tax burden would be shifted from income, corporate, etc, into a consumption tax wouldn't tourists be spending a lot more?  Florida for example makes over $55 billion a year from tourism, what incentive would there for people to go there if they could go to the Dominican Republic and other destinations for far far cheaper?

2) Wouldn't it seriously harm donations to charity?  I realize many people are kind of heart and give simply for that reason but there are a lot of donations given as simply tax writeoffs.

3) Wouldn't underground economies be even harder on the system since the Government would be seeing no tax revenue at all here at least they had some income tax from many people who participate in such systems?

4) Wouldn't this kind of tax remove a large tax burden from corporations that would have to be filled by private citizens? 

5) Some people who propose this tax argue that the price of goods would come down but wouldn't that only be for goods made in the United States?  Since a massive amount of goods are actually manufactured outside the United States wouldn't they actually become more expensive because of this tax?  Basically they're imported at the same cost as before but with a higher tax placed on them.


1) Not anymore than the VAT affects Tourism in Europe.

2) Not sure about this.  You'll likely see a falloff at the get go, but I think other benefits may arise.  It's a good question really and I don't have an answer.

3) I don't see how it would be any easier to sell something in the"underground" market.  You still have imports being monitored and all that.  The interesting part is the secondhand market that would go untaxed.  It would have an affect (I think) in a sharp burst, then a slow decline as the economy gets used to it.

4) Again, this has the same effect as the VAT.  Manufacturers in foreign countries would have to lower costs if they wanted to keep the demand.  On the other end of it, US labor might become viable again.


See your answers (and they're basically the same as those who're proposing this kind of tax) really bother me.  For example you never explained what kind of benefits charities would get in question 2.  I mean they're already nonprofit in the current system so how would less money coming in help them?  Basically wouldn't the Government have to step in and help with shortfalls? 

Also the VAT is affecting tourism in Europe, that's why countries are fighting to reduce the VAT on tourism.  But those proposing the FairTax in the U.S. are ignoring that and saying that large amounts of revenue will be generated from tourists.  If the FairTax ever goes through I'm betting tourism will start dropping drastically and the Government will have to step in and do something which will result in a lot of lost taxes.

And I noticed you never really commented on the fact that corporations would be paying far less in taxes.  Where do you think the shortfall will be made up?  How is it possible everyone will benefit and the Government will still be able to collect the same amount of taxes?  I just don't get it, it's like there's a lot of wishful thinking involved.

Oh from what I can see this system seems to encourage people to save their money, but that would be even harder on this kind of tax system since it wouldn't see anything from that money.  Wouldn't this kind of thing make the economy more susceptible to serious problems, especially recessions?  What happens if consumer spending starts dropping?  In the current system it's a serious problem, in the FairTax system it would be far more dangerous a problem.  The U.S. under FairTax would be pretty much completely controlled by the whim of consumers with absolutely no kind of safety net that income tax, corporate tax, estate tax, and many other taxes help to give the government.