I guess you missed that part where I called for a poverty prebate. Either that or you don't know what it is. In either case, it would not be regressive at lower income levels. Add in the fact that many other kinds of taxes that would be ended that tend to disproportionately affect lower income brackets and the low end is likely to come out ahead. (Plus everyone having a sizable monthly check from the government will provide a weak safety net all by itself.) The tax becomes regressive when the the equation shifts away from the prebate/tax structure changes to the raw regressive nature of the tax. If you're not familiar with how the math shakes out, that is a surprisingly high income level where it starts to flip.
The Fair Tax is a con game. I'm not going to go into it now because I can't muster the interest at the moment, but its doubtful that the Fair Tax would ever really decrease overall tax rates at all, given its complex structure and the way it shifts much of the federal tax burden to the states, forcing the states to make up the difference.
The FairTax would eliminate individual tax returns, but turn each business in the nation into an individual tax collector. Every business, traditional and Internet, will become a tax collector for the federal government. This creates huge paperwork and administrative burdens of small business and entrepreneurs that it is hard to see decrease the general invasiveness and compliance costs of dealing with the present code.
The rate is 23% percent - a huge tax increase on the working poor, and this must be added to already existing state sales taxes and state income taxes (as well as other special forms of taxation, such as for hotel rooms and gas tax (54% of every gallon of gas at the pump is tax, not the market price). Will gas be included (an extra 23% sales tax on a gallon of gas)?
Keep in mind that even if it is true that a worker would now get to take home his entire gross pay, everything he buys would suddenly experience a massive jump in cost of 23%. Is the worker better off? Depends on his effective tax rate. If he pays 23% of his pay in taxes, and everything increases in price by23%, its a wash. If less, then a clear regressivity sets in, which is then handled by a complex "prebate" system which is nothing but a welfare check.
The real tax rate, for most American's, will not be 23% either, but more in the area of 39% or so after the average state tax rate is taken into consideration (unless the federal government forces the states to elimination its state sales taxes, which will simply shift those taxes into other forms).
The FairTax will also make it easier, not more difficult, for Congress to raise taxes. Congress can easily come back each year and adjust the combined Federal tax rate percentage upwards, year by year, over time.
Little will change here.
The FairTax doesn't really even eliminate the IRS, a key statutory provision of the Flat Tax. As the Fair Tax Act of 2005 says:
There shall be in the Department of the Treasury a Sales Tax Bureau to administer the national sales tax in those States where it is required pursuant to section 404, and to discharge other Federal duties and powers relating to the national sales tax (including those required by sections 402, 403, and 405). The Office of Revenue Allocation shall be within the Sales Tax Bureau.
Not the least of the problems is that the FairTax is, far from being regressive, actually progressive in nature. How you ask? Isn't it a flat 23% on all new goods and services? Well, yes and no, it appears. Why? Because of the "rebate" equal to "the FairTax paid on essential goods and services" given out each month. However, as most of the poor will actually pay less than zero% in retail sales tax on their overall spending, the rebate will, in actuality, be engaged in the redistribution of wealth from some sectors of the economy to others, just as in the present progressive system.
The FairTax movement itself is proud of this state of affairs:
http://www.fairtax.org/site/PageServer? ... answers#49
The prebate seems also to be a very, very bad idea, from both a philosophical and moral standpoint, encompassing some of the worst elements of the mentality of a "guaranteed annual income" of the political Left. Instead of giving each and every citizen a government check each month (and the psychological effects of this are already well understood through out long experience with our own welfare state), why not just lower the rates to the extent that no rebate is necessary at all and no specific desire for one arises in the general population (the rebate would go to everyone, from people who buy very little to Donald Trump, and would simply be, effectivly, a national welfare program less means testing).
One major idea behind the flat tax movement is to subvert the ability of the federal government to spend money and invade ever more aspects of our lives. I do not see the FairTax accomplishing most of those goals, and indeed, substantial bureaucracy would be required to administer the plan, at both the federal and state level and new overhead costs would be created for countless individual entrepreneurs.
Tax cuts, over time, stimulate economic activity and increase government revenues. This is an unwanted side effect of cutting taxes in the proper way, which is why the flat tax itself is not adequate, but must be coupled with Congressional action that decreases the size and scope of government in an absolute sense.
http://www.fairtax.org/site/PageServer
Far more complicated, indeed, than the flat tax. It would also likely simply be a new federal tax that would be compound with ever higher state taxes. The actual tax burden may, in the end, be little changed.
It would be revenue neutral. Adjusting the rate would determine if the burden is the same or changed. It would simplify the tax code way beyond its current state and would be more simple than what you advocate simply because it would eliminate a variety of other forms of tax (capital gains, corporate, FICA, etc.) The law would have to be structured in such a way that not adding in selective breaks is a sacrosanct rule, otherwise the same screwup of the tax code is inevitable. But that's an issue with any tax plan.
Because everyone doesn't make the same dollar amount.
Well, that made no sense. I guess you couldn't google free republic for that answer.
The flat tax is only regressive, to a degree that it is relevant...
The effective tax rate would decrease as wealth increases if you changed the current income tax to a flat tax. In order to avoid that, you'd have to revamp the entire tax system (just like I propose). Further, the less able you are to afford, the more burdened you'd be by the change which is where the "fairness" intuition goes all awry.[/quote]