Andir said:
My few concerns on your perspective here are that there a very few people (percentage wise) that are in the very high tax bracket and those with money will likely find a way to spend it (or whoever inherits it will.) In essense, the money will be spent in one form or another, those that save their money for a later date re-inforce the economy later when it's needed. If they are out of a job and not contributing to the income tax, they are most likely still spending money and paying the consumption tax. In effect, those that save for a rainy day are protecting the economy in the grand scale of things. And about the cost of living. The 23% you would be spending on everyday things would likely be less than you pay out in taxes unless you are one of those that lives with your credit card maxxed out and every penny goes to repay that month to month. The poor will likely be those that spend the entire paycheck as you noted, but the percentage going out is less than that being spent in income taxes, add that to the "prebate" and you'll likely have more money in the "less fortunate" people's hands year to year. |
Well, the problem here is that the wealthy accumulate wealth, not spend it. Sure, they spend some, but have you seen the top earners in the world? Do they stagnate? Do they go down each year? No, as I recall, they have more money year after year. It's typically a function of "money working to make more money". If they pass it on to their heirs, their heirs are now wealthy and just as likely to hold it. But under the current tax system, that money can't pass from generation to generation untouched because of the inheritance tax. That encourages the person to do something with it rather than just hoard it, because eventually the government will get it anyway.
And no matter how you argue it, there is simply no way that I would end up paying less in federal taxes overall. If I pay less, then somebody else has to pay more because the federal government is spending it. They'll set the rate high enough to keep the total tax revenue the same (or more). The only way I pay less is if the federal government stops spending as much and lowers the tax rate. And that's applicable to both versions of the tax code anyway.
New concern #1: What about all this money people, including me, have set aside in Roth plans specifically to avoid tax? Now that's taxable? Is that fair that we paid tax on it and have to pay tax on it again when somebody who did a regular IRA only has to pay the tax once?
Old concern (#3): Is it fair when two people make the same amount of money but one has to pay more in expenses (foster parents, for instance) that the one that has more expenses is now covering a larger part of the tax burden because of the fair tax?
Just off the cuff, I'm thinking it needs to be exactly the opposite. What about inverting the fair tax system? If you save money, they tax it. If you spend it, you don't get taxed. That would stimulate the economy and force rich people to start doing something with their money rather than keeping it tied up in stocks, unless the stocks are performing well enough to outpace the taxes. To me, this seems just as logical if not more so than the fair tax being proposed. The poor would pay none of the taxes unless they had enough disposable income to start saving (in which case, they are moving out of the "poor" classification, no?) And the rich would have to start spending lots of money / giving it away to other people who would spend it. That would have a massive stimulation for the economy. Of course, this is the real world, and more likely the rich would just find another way to hide their money so they could keep what they've earned. That's what they do. That's what I would do too if I were rich.
