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Finally a Fair Tax!

Maybe it's not all it's cracked up to be but folks over at have what looks to me like a long overdue fix to our horrible tax system. Their premise is that it would be far easier (simpler to define, simpler to run, simpler to monitor) to tax consumption rather than income. In other words, have a federal sales tax replace the federal income tax.

To me this has the following advantages:

  • No more filing tax returns (except for those states that have income tax).

  • No more taxes on savings. The more you save, the less taxes you pay.

  • The tax base is expanded from those who have legal work to everybody that buys stuff. This includes illegals, tourists, etc. Basically anybody who buys stuff in the US.

  • Makes the US more business friendly. No more worrying about corporate income tax. No need to incorporate offshore to avoid taxes.

  • Lower prices. The current income tax is built into the prices of our products. If you buy an apple, the price includes income tax for the worker that picked the apple, the farmer, the people transporting the apple, the grocery store, and the grocery store employees. The income tax already touches everything we purchase; the fair tax just makes it more transparent.

  • It's simple. One flat tax rate for everything. No complex system requiring an army of lawyers and accountants to understand. Plus it would end the IRS as we know it and save the government billions (I think the US spends $300 billion per year to run the IRS).

  • On top of all that, there will also be a monthly prebate of spending up to the poverty level. This way the tax is not a burden on the poor.

I think it's a great idea and, until somebody shows me how it wouldn't work, I think it would help the country immensely.

What do you think?


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