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Originally Posted by Jack's Smirking Revenge
The first red flag is the way they calculate the 23% rate: it's inclusive, meaning that the tax would be 23% of the total amount you pay for an item, including the tax. The fair tax proponents admit that it's inclusive, but they know most people won't have any idea what that means.
Darkness is correct when he says it would be bad for the middle class. It's an obviously regressive tax: the wealthy spend a smaller percentage of their income than the middle and lower classes do, so they'd end up paying a smaller percentage of their income in taxes. He's also correct on the fair tax's effect on spending, which would hurt the economy.
The only thing the fair tax has going for it is the ability to stop people from hiding money from the IRS. It would also lower IRS overhead, but not eliminate it. The proponents overplay the simplicity of it. There would be more adjustments made for other income levels, and industries will lobby like crazy to have their products and services exempted. Politicians won't deprive themselves of opportunities to grant those favors for voters and donors.
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As I understand it the capital gains tax is less than the wage tax. And those with the greatest amount of wealth spend more than the average family.
One other thing to consider would be foreigners who vacation here. They would make up a share of federal income they are not paying without a sales tax.