The FairTax, Join in!

[Final-Fan]

Eomund said:

Final-Fan said:
I don't want to derail my "first one issue, then the next" strategy because I fear this thread would bog down quite quickly, but I want to address one thing in your exchange with cleveland124:

Him: "My biggest problem with the fairtax is currently we have a lot of #'s but they are all projections. No one knows for sure what the first year with this tax would be like."

You: "Is this all that is stopping you? How many countries had an income tax before America?... none that I recall. America has always been on the leading edge of things and would continue that tradition with the FairTax."

Yes, and far be it from me to stand in the way of progress, but this is an awful risk we would be taking to replace our ENTIRE tax system with one that has never been tried on any even remotely comparable scale of size and scope (AFAIK).

The UK actually had an income tax before we did but it was a war tax so maybe it shouldn't count. I don't know if any other country had an income tax on a permanent basis before we did in 1913, because Wikipedia doesn't mention it one way or the other and that is where I got all my info. Well, that and the Treasury site it linked to.
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States
http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml

The income tax started out as a tax on the rich! ("Less than 1 percent of the population paid income tax at [first]." -- Treas. site) Also, it was implemented to supplement tax revenue that was (A) becoming increasingly inadequate and (B) collected mainly through tariffs and taxes on specific goods such as chewing gum -- inefficient, haphazard, and half-assed all around.

But more importantly to the discussion, this new income tax did not REPLACE the existing taxes -- it supplemented them, and when the new method of taxation was found to be more effective, supplanted the old ways. (Tariffs as revenue sources, random excise taxes.) So in that way, the FairTax proposal -- which, as I have been given to understand, would take full effect overnight -- is nothing at all like the introduction of the income tax.

Rather, a FairTax proposal like the initial income tax proposals would, say, call for replacing 10% of the income tax with a national sales tax of whatever size would make it revenue-neutral, and call for another shift of, say, 15% every five years if an economic review board gave the thumbs-up each time. We would be entirely converted in 35 years. Not only would this guard against the plan being disastrous in and of itself, it would help people and businesses both adjust to the new system. The current "all-in-one" proposal is a leap of faith into the unknown which is unmatched in the history of taxation in the United States and possibly in modern history.

I agree with your not wanting to derail this thread point, but I felt like I needed to respond. The FairTax does not replace every tax that our government levies. It will only replace Income Taxes, Corporate Taxes, Estate Taxes, Gift Taxes, Capital Gains Taxes, AMT, Social Security Taxes, Medicare Taxes, and self-employment taxes. It leaves in effect a few taxes like the excise tax. Anyways that is hardly much to mention I would assume, just throwing that out there.

Yes, but the POINT is that when the income tax was introduced it didn't ERASE the old major sources of income. Correct me if I am wrong but I believe that the taxes you name constitute over 90%* of current federal tax revenue? At the time excise taxes and tariffs were that source of income; today they are merely policy tools AFAIK. (Don't smoke; use American farm produce; etc. etc.)

P.S. I'm all in favor of continuing this one line of questioning; not derailing the thread was why I only picked one thing out of that exchange to discuss.

*Finally got it! This was hell to find but I finally got a source that seems trustworthy on this: http://www.nashvilleareainfo.com/Default.aspx?Page=FederalTaxes
2004 stats: personal income taxes: 43%; Social Security AND other payroll taxes: 39%; corporate income taxes: 10%; excise taxes: 4%; all other taxes, including estate, gift, and customs taxes: 4%. So it looks like the FairTax would replace about 95% of federal tax revenue sources.