The FairTax, Join in!

[Eomund]

koffieboon said:

Eomund said:

 

Further, this is a tax hike on the middle class. If you make less than $15,000 you win. If you make more than $200,000 you win, because you actually save more and spend less of your income. This is a nice populist proposal which sounds good but is economically challenged. It only works on someone who has not read about the problems.

I make more than $15,000 and less than $100,000, yet I know about all the "problems" and still support it very strongly. I doubt there will be a serious if any tax hike on the "middle class." If there is I think their income increases would offset it. Who is to say that the Middle class can't save more as well? They could invest a small amount and get dividends every month to supplement their income as well. This argument fails to convince me that the "FairTax is nonsense."

The FairTax removes power from the government and puts it squarely back in the hands of the people. The congress can't jack with the rate like they can with an income tax. It is one of the best ideas in a very long time.

Assuming the government collects the same amount of tax and the groups of under 15k and above 200k will be better off, the only outcome is that the middleclass will pay more taxes. It is the only way the numbers add up, someone has to pay for the decrease of tax payed by other groups.

Now about the last part, what will prevent congress to increase the sales tax rate? I really don't see a difference with the income tax here.

But on a different note, doesn't the US have some real issues to resolve instead of arguing about a tax reform?

This is a common argument I have heard in this thread. One I have debunked by pointing to Wal-Mart. How is Wal-Mart able to sell its wares so inexpensively? Volume. The number of goods and the number of transactions outweigh the barely over cost prices. Wal-Mart is hugely profitable. The same can be said about taxes. When rates are lowered, more people take less precautions to avoid the tax. This increases the tax-base, increasing the volume of tax payers. We saw this under Reagan vividly. We have seen a similar event under Bush. Tax cuts = more money to the people. More money to the people = more economic growth. More economic growth = more tax revenue. It all offsets. Taxes are not a zero sum game. When you cut taxes at the top, the economy can grow because there are more investments. Businesses need investments to grow. When businesses grow, more people can be employed increasing tax revenue.

A similar effect will happen with the FairTax. It doesn't necessarily cut the rate, but it definately increases the tax-base. Therefore no one group will be hit any harder with taxes than they currently are. Infact I wager that most groups will see a positive impact under the FairTax all the while tax revenue stays the same. 

Do not misunderstand me. I do not want to cut taxes or implement the FairTax to increase the Tax revenue collected. Tax money, to a point, is better left in the hands of the one who earned it. There are necessary roles for the government to play in society, like prisons, roads, secure borders, etc., but when they start meddling with the private sector it always has unintended consequences.

Congress can and likely will increase the rate eventually. They could decrease it as well. The rate is comprised of three portions. A general revenue portion, a social security portion, and a medicare portion. These three are joined at the hip when it comes to what portion of the FairTax revenue they get, however. They split the revenue based on the percentage spent in the budget. The rate can only increase through the increase of one of the three "pillars" of the rate.

The income tax is a convoluted mess. Congress can include credits or add penalties to an income tax system. That is how they control people. Did you know that over 80% of all business decisions are based on tax liability? They already control us. The FairTax removes this control.