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Tuesday, April 18, 2006

DU On The FAIR Tax

There's a profound shift going on underneath the political radar. I think the American electorate is on the point of wanting real change. I am not sure at all that the environment favors the Democrats. We may be approaching a Jacksonish era in which populism dominates. DU on the FAIR tax:
The original post:
Mike Gravel (Alaska Democrat) just said he is for the FAIR TAX.
Is anyone familiar with the fair tax plan? Is it a good idea?
And it does have supporters:
6. if you pay based on what you consume, wouldn't the rich pay more?

For me and my family we don't consume that much stuff. So if what you are saying is true, my family would save money.
The opposition is based on the idea that the rich could avoid it:
8. no, because they will import, buy on-line have their rolls flown back to the US, you do consume, you will be paying an income tax every time you buy donuts at the 7-11 and you will get no deductions. It's the Income Tax with a twist, all the pain but no refunds. You will be paying huge surcharges on your phone bill, while the rich use phone companies with broadband.
And one counter:
5. I support it, but a lot progressives don't.

Edited on Mon Apr-17-06 10:01 PM by Idioteque
The FairTax is a national sales tax. It replaces ALL federal income, payroll, gift, estate, and capital gains taxes with a 23% inclusive (30% exclusive) sales tax.

While ordinarily this would be EXTREMELY regressive, the fairtax fixes it by giving each family a monthly "prebate" of the tax rate times spending up to the poverty level. This essentially untaxes the poor and makes the tax progressive.

Right now the only cosponsers in the Congress are Republicans. Democrats were cosponsering it before but Pelosi made them stop which is unfortunate.

Here are some good links.

FairTax Website
Wikipedia Article

Edit: Although the FairTax is mostly supported by conservatives, there are several progressive arguments in favor of it. Here are just a few.

1. Simpler Tax Code - The wealthy can't use loopholes and deductions to avoid paying taxes.
2. It only applies to new items. It encourages recycling and effecient use.
3. It gets rid of the regressive payroll taxes for SS and Medicare and ensures that they are fully funded. It will get rid of the need for "reform".
4. Items manufactured in the US and shipped abroad won't have the tax while items from others countries in the US will carry it. This means that American businesses will be more competetive and less jobs will be outsourced.
5. Families who only spend up to 30,000 year will pay ZERO taxes.
For more about this, see Gindy's blog. Go to the section on "Articles of Interest".

Totally unrelated but very funny - Gindy posts a joke.

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