FairTax Plan: is this the solution?

[Dulax31]

The FairTax Plan is a nonpartisan national grassroots campaign to replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment.

http://www.fairtax.org/

I was wondering what others thought of this plan. Is this really the solution to all our problems with the tax code?

[scooter]

sounds good just lookin at the front page, but then again, i really dont have any problems with the taxes i pay now....I'm just hopin SS will be there when I retire

[somrandomguy]

I'd support if it included a provision saying "we're still going to tax the hell out of corporations and the rich" but of course it doesn't.

Other than that, I'm of two minds on this:
1) It will reduce consumption, which is a good thing, as Americans need to consume less and save more.
2) Our entire economy is basically based upon debt spending, so discouraging spending would bring it to a screeching halt. Also, I think this definitely falls under "starve the beast" tax plans.

[Kyle Berggren]

There's another thread about it somewhere here... I didn't do a search, but this is actually the site that helped me open up to it.

It will curb consumption at first, but it won't change our culture overnight. One of the best things about it is that businesses won't be double taxed, however they'll still be taxed on consumption. The numbers add up & we would be pretty close... I hate the fact that it would put a lot of accountants out of business, people that aren't very easily moved to new jobs, & they spent years of their lives/tens of thousands or dollars to become a CPA. However ideal it may be, I keep questioning whether or not implementation has too many drawbacks.

[StrykerFSU]

"we're still going to tax the hell out of corporations and the rich"

Who gets to decide who is rich? According to Ted Kennedy, people making $180,000 are rich. Is that who you are talking about? Taxing corporations at a high rate stifles the economy, which is bad for everyone.

I think we all agree that taxes are a neccesary evil, even if they are a somewhat abstract concept for most of the posters here who are still claimed as dependents. All that we can ask is that they be applied in as fair a way as possible, something I don't think is true today. Taxes should not be used as a tool for wealth distribution. If the Fair Tax treats all Americans fairly, then I'm all for it.

[CATLAX MAN]

Actually, consumption is good for our economy. It keeps the dollars flowing within different types of businesses and encourages employers to employ people. Curbing consumption will trigger a recession and, eventually, lead to higher unemployment.

There are a number of things in the tax code that have stimulated private sector takeover of things that the government has done pretty poorly. As an example, the office of HUD (Housing & Urban Development) used to be in charge of building & developing low-income housing. They did such a poor job of it that the the tax code was changed to offer low-income housing credits to developers. The private sector took the ball and ran with these credits and have done such a good job with it that HUD is out of the development business now. They mainly provide affordable loans to these developments now. The Fair Tax would remove credits like these and put this squarely back in the government's lap. That would be a disaster.

[Kyle Berggren]

...and there's also governement contracts... If the houses are built, taxes are paid, there can still be tax credits for government work (althought I'm still against it at this point).

Why was the government so inefficient? There is an easy solution, there has to be. If the government was simply giving a tax credit, they could credit back the consumption taxes, or provide $20k upon completion... There's lots of options if it worked before. I won't debate you on whether or not this is the government's responsibility, but it is possible.

[DanGenck]

I don't know... it would certainly be a kick in the teeth for people like me who work in education. One of the selling points of not making a lot of money is knowing that you do not pay a lot in taxes. I actually did my taxes today and was given back almost my entire property tax from the State of Connecticut because of how little I make (our property tax is actually a car tax by each town, so you pay regardless of if you rent or own a home).

I think putting in a larger sales tax on someone in the lower-middle like me would be a big incentive not to be in this industry. After refunds, my wife and I paid about $1,750 in federal income tax with me working as a teacher and she working as a psychiatric technician for troubled kids. I have to believe we'd hit that point ($1,750) a lot faster with a sales tax. We break pretty close to even as is, so any more money out of our pockets would be rough. We would definitely consume less, though I'm pretty sure we consume a small amount already (The majority of our money goes to groceries, gas, maintenance to our apartment, and dinner out once a week or so. We're really wasteful!).

Unless Kent School is going to start handing out $50,000- $55,000 a year for teachers...