| Final-Fan said: I'll do a thorough response later, but for now: Your list neglects my objection that the FairTax gives a huge tax cut to the rich that's paid for by the middle (and lower-middle and upper-middle) class. I'll be checking the posts for other possible oversights. [edited out my little misunderstanding.] |
Let me respond to this objection now. Sorry about not including it before, I just forgot about this objection.
First, what is wrong with a tax cut for the rich? They would still be paying the majority even under this chart:
I still maintain that this chart is inaccurate, but even so it proves my point. The "rich" still pay 45.9% of the taxes.
Now lets get to your next assertion, the "tax cut" would be paid for by the middle (upper and lower middle). Lets look at what happened under current law when the "Bush Tax Cuts" (PLEASE DO NOT GET INTO BUSH POLICY IN THIS THREAD). With the rates for the "top" were cut, revenue to the government increased dramatically. No group(s) paid for those tax cuts. The reason that government tax revenue increased was the tax base increased. The tax cut allowed for more investment and job creation. This employed more people, all of whom pay taxes thereby increasing revenue.
To look at a private enterprise with a similar philosophy we will look at Wal-Mart. Wal-Mart makes money, lots of it. Why do they make money? They sell lots of things for cheaper than elsewhere. This is only to show that when you decrease the price, more people come to buy your inventory.
The same is true with tax policy. When you cut taxes, people have more to do with whatever they decide. Many people will decide to simply spend it. Others will invest or save it. Some will do some of both. All three will help stimulate the economy. The stimulated economy will pay more taxes than a higher rate would be able to do. Taxes are not a zero sum game. When you add more people to the tax base, by cutting taxes, you increase government revenue. It was shown under Reagan as well. He cut the highest tax rate from 70% to 28%! Then the government went from collecting about $500B to $1T! He doubled the revenue by cutting taxes. Now tell me again how tax cuts are a bad thing? I understand you will probably disagree with my point of view, but this is shown in the facts of the past.
Now the FairTax. You claim that it will be a tax cut for the "rich" and it seems according to your chart that they would pay 7.6% less as a percentage of total taxes collected. This does not mean that the other groups will see a tax increase to remain at revenue neutral. These charts (I posted them earlier too) show the effective tax rate of current law and the FairTax:
and
These charts seem to me to be showing that the effective rates are going to decrease under the FairTax. Effective tax rates are rates people end up paying after the tax refund (Current law) and prebate (FairTax) are applied.
The FairTax will increase the tax base, similar to how tax cuts increase the tax base. Thereby increasing revenue to the government without raising tax rates on anyone.
So I disagree that your claim that the "huge tax [edit: misspelling] cut to the rich [that will be] paid for my the middle (and lower-middle and upper-middle) class," has validity based on past tax cuts and the effects they have had on government revenue and the economy.
