FairTax Overview
Visibility and effect
47% of filers pays zero income tax
on future tax burden and are completely unvested in the
tax system. Among the hidden costs
they do not see are the $431B in
compliance costs, $307B in corporate
taxes, and the drag on economic
growth from the deadweight loss it
engenders. Estimated to be 2-5% of
GDP.
The FairTax ensures a built-in
downward pressure on the size of the
government by vesting everyone equally
in the tax system, by exposing the full
costs of the federal government, and by
requiring the government to raise taxes
for everyone rather than to shuffle taxes
from one industry or income class to the
next.
The flat tax buries capital value- added
taxes in the business sector. The flat
tax’s touted two-thirds supermajority to
raise rates offers only illusory
protection, as a simple majority can
override that supermajority
requirement.
Sustainability and
feasibility
Once enacted, taxes must be raised on
every consumer in the U.S. to change
the base. States have used sales taxes
for over 60 years; they are in effect in 45
states. The tax can be collected in
conjunction with state sales taxes.
A flat tax just won’t stay flat. Nearly flat
in 1913, it eventually devolved into the
mess we see today. The flat tax bill
itself cannot even be introduced in
pure form.
Lawmakers, policy makers,
economists, and taxpayers agree that
the current system is a monstrosity
held in place by an intricate web of
special interest groups and must be
replaced. Changes are adopted
every year.
Karen Walby, Ph.D., Director of Research, Americans For Fair Taxation, March 5, 2013..
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