Just did my taxes. So, rather than pay what was an effective tax rate of probably around 15%, I would be paying 30% on everything I buy. So IF I spend my money (which I have to do with my current living situation, and any way, whats the point of having money if I don't spend it) I am paying twice as much as I was under the IRS. Sounds terrible. I don't care if it comes out before I get my money or comes out after I get my money, it still comes out.
I'm not sure if the people arguing for the Fair Tax fully understand the current taxation system.
Say I make 65,000/year and have 10,000 in deductions (but would probably be a lot more, but I will be conservative), my net income is 55,000 dollars.
Now, I would pay 10% of my income up to 7,825 dollars, I would pay 15% from 7,825 to 31850, and pay 25% from 31851-55000
so it breaks down like this:
782.50 + 3603.75 + 5787.25 = 10,173.50 in tax paid total
which equates to 15.65% effective tax rate.
This doesn't include social security, but I think the VERY LOW estimate of 10,000 in deductions cancels that out (not to mention, you will COLLECT on social security later)
This would be a disaster for the middle class and completely destroy our economy.
You made a couple mistakes here.
First, income tax is an inclusive tax, so you need to compare to 23%, not 30%. If that doesn't make sense, think about making $100, and having it taxed at 15.65%, versus spending $100 and having 23% of it go to taxes.
Second, yes, you'll collect on social security later, but you'll collect on it later with the FairTax anyway. Social security plus Medicare taxes sum to 7.65%. Add that to 15.65%, and... well look at that, you're at 23.3%. Roughly the same as the FairTax! And that's assuming that you spend 100% of your net income every year -- if you don't, you'll pay less taxes, if you spend over (by borrowing), you'll pay more taxes.
Third, you get a prebate with the FairTax, so you have to figure that in to make a fair comparison.
