The FairTax isn't intended to raise any more or less money for the federal government to spend - it is revenue neutral.
Expert analyses have shown that the FairTax lowers the lifetime tax burden of all of us: single or married; working or retired; rich, poor or middle class.
Anyone care to explain how you can take less from everyone and have the same amount of money?
UPDATE: A lot of very intelligent responses in the comments, and thanks for that. Two quick things. One, many of the comments mentioned that the FairTax will bring this or that tax base (say, the informal economy) into the system -- great, but then it increases their lifetime tax burden, so you're not truly taking less money from "all of us."
Two, some comments have claimed that this will more equitably distribute the burden, but as I've showed before, the president's tax commission found quite the opposite. Relative to the current system, only the very rich and the very poor pay less, and everyone else pays more:
[M]ost people would pay more than they do now. The report's Figure 9.4 looks at the difference between today's tax law and a "full replacement retail sales tax proposal with prebate by income level" (which may differ in the particulars from Boortz's proposal). The FT is better only if you're in the $0-$15,000 or $200,000+ categories. Looking at the data in terms of deciles, the lowest-earning 20 percent and highest-earning 10 percent of Americans would benefit.
3 comments:
The FairTax brings back trillions of dollars parked in offshore accounts, those who pay no income taxes such as the uber-rich who live on dividends, pay the FairTax, those who get paid "under-the-table" now pay the FairTax and every tourist to our country would now pay the FairTax for every souvenir they take back home. All this is money that lessens the tax burden on hard working honest people like you and me.
As for greater tax equity under FairTax, consider the following research:
The effective tax rate percentages, that different income groups would pay under the FairTax, are calculated by crediting the monthly "prebate" (advance rebate of projected tax on necessities) against total monthly spending of citizen families (1 member and greater, Dept. of Commerce poverty-level data; a single person receiving ~$200/mo, a family of four, ~$500/mo, in addition to working earners receiving paychecks with no Federal deductions) Prof.'s Kotlikoff and Rapson (10/06) concluded,
"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.
"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."
Further, per Jokischa and Kotlikoff (circa 2006?) ...
"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."
1. Economic growth (increase the dollars in the base)
2. More taxpayers (tourists, aliens, criminals)
3. Reducing the cost of tax compliance (currently estimated at $400 - $600 billion annually)
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