tag:blogger.com,1999:blog-10424035.post112498002261249560..comments2023-09-11T08:58:24.710-06:00Comments on Reach Upward: Tax Simplification: Flat Tax or "Fair Tax"?Scott Hinrichshttp://www.blogger.com/profile/11831447472339880148noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-10424035.post-1140910655479578992006-02-25T16:37:00.000-07:002006-02-25T16:37:00.000-07:00Dear Scott,You raised some concerns about FairTax,...Dear Scott,<BR/><BR/>You raised some concerns about FairTax, and they are valid concerns, but I hope I can address them here. If you have further questions you can email me at utahvalleyfairtax@gmail.com<BR/><BR/>I will treat your points of concern as questions in a little Q&A session.<BR/><BR/><STRONG>Q:</STRONG><BR/><I>"It is highly regressive up front. The poorest people would be hardest hit at the point of sale and would be forced to file for a refund proving their poverty after the government has held their sorely needed money for up to a year."</I><BR/><BR/><STRONG>A:</STRONG><BR/>Under the FairTax proposal no one needs to prove their poverty to the government. <I>Every</I> American household would receive a monthly prebate check based on the size of that household. This accomplishes two things;<BR/> (1) It ensures that no one spending less that the official poverty level has to carry the burden of taxes. For example, I am a single man with no dependents, and my corresponding poverty level is $9,570 annually. I would receive a monthly prebate check of $183 ($2,201 annually) to cover the 23% tax on all my purchases up to $9,570.<BR/> (2) It makes the otherwise flat-rate tax progressive, because no matter how much I earn or spend I receive the same monthly prebate check. If I spend $9,570 in one year I pay 0% in taxes, if I spend $19,570 in one year I pay $2,300 (23% of $10,000 and 11.75% of $19,570) in taxes, if I spend $59,570 in one year I pay $12,500 (23% of $50,000 and 20.98% of $59,570) in taxes, and if I spend $209,570 in one year I pay $46,000 (23% of $200,000 and 21.95% of $209,570) in taxes.<BR/> <BR/><STRONG>Q:</STRONG><BR/><I>"A national sales tax would distort the market costs of goods and services. If you bought a home for $180,000 your end price would be $221,400 with a 23% sales tax."</I><BR/><BR/><STRONG>A:</STRONG><BR/>Only retail goods and services will be taxed. So you will not pay a tax when purchasing a used home or car. A new home will be subject to the 23% sales tax, but on further request I could show you that the price of new homes will drop by about 20%, so there’s only a 3% increase in total price. But if you’re not paying payroll taxes (which you wouldn’t under FairTax) you’d be able to afford that small price increase.<BR/><BR/><STRONG>Q:</STRONG><BR/><I>"History shows that it is easier to pass a sales tax increase than an income tax increase."</I><BR/><BR/><STRONG>A:</STRONG><BR/>That is more likely because sales tax increases are on the order of 0.05%-0.1% while income tax increases are on the order of 1%-5%<BR/><BR/><STRONG>Q:</STRONG><BR/><I>"As has been demonstrated in other countries, it would spawn a new black market system and a new national sales tax collection bureaucracy."</I><BR/><BR/><STRONG>A:</STRONG><BR/>No system comparable to FairTax has been tried in any other country, so I’d like to see some evidence of that claim. On the contrary, gasoline taxes are as high as 26% and there is no black market system for gasoline.<BR/><BR/>I hope that answers a lot of your questions. I also hope that you’ll research the FairTax proposal a little more and maybe even become a supporter. Feel free to visit my blog as well.<BR/><BR/>Sincerely,<BR/>Russel FugalAnonymoushttps://www.blogger.com/profile/11185283890676757548noreply@blogger.com