Forum Post: So what about the FairTax.org proposal?
Posted 13 years ago on Nov. 16, 2011, 1:23 p.m. EST by NotYour99
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A consumption based tax where you get taxed on what you spend. No loophole, 100% of your earnings coming home with you, and no one living below poverty level pays because everyone gets a rebate fir that amount if tax.
If it doesn't include taxation of food, water, clothing, and shelter, I'm willing to at least give it some further consideration. If it includes taxation of these items, i'll be moving on to the next shop window.
There are some exempt items. Education expenses are exempt for one. But not food, or other consumables. Again, all spending up to the poverty level is basically tax free because of the rebate. Housing... If I remember right is only if you are buying a new house. FairTax.org spells it all out.
So corporations would be taxed for consuming labor, right?
At least try to contribute to the actual topic here please.
Here's why that's not a good idea: for you to create a business that can make it to the top you have to sell a product to people. This means that people have to buy your product. If there's a big fat tax on spending your money and no taxes on saving it or investing it or gambling with it, then people will by a lot less stuff and think a lot more carefully before they open their wallet to you. This means almost no impulse buys of your product, and far fewer sales in general. Fewer sales = less profit= a harder road to the top for the little guy. In effect, the Fair Tax comes out of the small businessman's pocket 90% of the time through reduced consumption.
I don't see people not making impulse buys as a bad thing. Lots of what I see here is buyers remorse in the first place. Saving is a good thing. It's a way you can help control your own amount of taxation to a degree. People here also press others to buy American, from the small business, etc. With that ideal (however far fetched) implemented would negate that "problem". With the mentality of spending present today I doubt it will make huge changes. People will have more money to spend since none would be withheld.
That's just one of the arguments against it; the other is that by nature it's an incredibly regressive tax. It either hits the poor really hard or pretty much ignores the rich, and it de-stimulates demand. For an economy to work, while we don't want people spending what they don't have we need people to spend the money that they invest.
It's not regressive, in it's design it's actually progressive. Those below the poverty level wind up paying nothing. It's not until you're at a fairly high consumption rate that you are paying close to the actual tax. It doesn't ignore the rich at all. It's a tax collected at point if sake which you can't avoid or loophole and the more you spend the more you pay. People save money to invest or whatever but ultimately they have plans for spending it. When it's spent it will get taxed.