FairTax Overview
Answering the Problem Posed by Border-Adjustable Tax Subsidies.-- There are two ways tax-writers
could confront the reality of global border-adjustable taxes: (1) encourage our trade representatives and
trading partners to allow income taxes to be border-adjusted, or (2) adopt our own destination-based
consumption tax. The first will never happen.
To get some sense of the Herculean task involved with the former tack, consider convincing the WTO’s
Member countries to eliminate the admittedly artificial distinction now drawn by the WTO between
direct taxes (income taxes) and indirect taxes (consumption taxes) on which their trade subsidies
depend. These are the same nations willing to sue in international courts to get the U.S. to abandon its
relatively minor export incentive worth about $4 billion annually (the Foreign Sales Corporations) so as
to preserve for themselves this unilateral advantage.
Even if such diplomacy were to miraculously prevail, eliminating the indirect/direct distinction would
only countervail a sliver of the tr YH