9/29/2005

Is the "Fair Tax" fair?

Rep. John Linder of Georgia has proposed a thought provoking solution for the nation's tax problems. It is an amazingly simple plan. Basically, all taxes including federal income taxes, death taxes, capital gains taxes, and payroll taxes will be abolished and repalced with a national retail sales tax. The fair tax will be a 23 percent sales tax on all final goods and services. Intermediate goods will not be taxed. Social Security and Medicare will be paid from fair tax revenue. The tax burden will be placed on all individuals making purchases in the United States. Illegal aliens will be taxed, individuals being payed under the table will be taxed, and rich and poor alike will be taxed. Individuals would not have to worry about filing for tax returns, businesses would only be concerned with sales tax returns, and the 20,000 page book of IRS regulations would be done away with. This plan will automatically create incentives to personally save money because tax dollars will be derived from spending. Although the fair tax is recieving record breaking support it probably won't pass. However, its proposal may spawn other creative solutions to our tax problems. It may be to simple and basic to be perfect, but man, it sure sounds good!

4 comments:

Jasmine said...

While this "fair tax" or a "flat tax" are great and fair ideas in my opinion, they will never happen. There is just too much at stake. Many job and companies exist solely to do taxes. Several lobbying groups would not approve and do all that they could to stop a fair tax from happening. Plus I think the government enjoys the power of the tax system. They can create laws so confusing that people end up paying more than they are supposed too. Also, while saving can be a good thing, if there is too much it could hamper the economy. While I am all in favor of a fair tax, I just think that there are too many people and organizations with influence against it.

Dr. Tufte said...

-2 on Logan's post for multiple spelling errors.

I don't have much to add - I agree with Jasmine.

Matthew said...

Dr. Tufte agrees with Jasmine who says that a fair/flat tax will never happen, for multiple reasons listed above, which are true. My question is, if taxes get bad enough, won't people stop having an incentive to work hard? Won't everyone want to start living off the government? I guess the government knows how far they can push it before the working class decides enoughs enough and so they'll keep taking our surplus.

Dr. Tufte said...

Matthew: don't you think one of the "big questions" of life is where this borderline is?