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> To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a na

> To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States. Let me guess, this "sales tax" would mostly apply to things that poor people buy, and not the things rich people buy (like legislation). No, if you want a "fair tax", let's look at how much the median American pays relative to their net worth. It's about 8% per year, which means there should be a wealth tax of 8% (with a tax-free allowance on the first $100m so that 99% of people are exempt).

WillPostForFood 5y ago
>The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families.
- dragonwriter 5y ago
  > The FairTax provides a progressive program called a prebate That's not progressive (the marginal rate is flat, not progressive); its equivalent to a very low UBI [0] + flat tax. Is it better than a flat tax without a “prebate”? Yes. Does the prebate avoid a massive downward shift of tax burden compared to the status quo. No, it doesn't. And that's even before considering the fact that its not revenue neutral and is proposed by people who want to use it as leverage for social program spending cuts. [0] By the stated basis, its a UBI equal to the consumption tax on spending at the poverty line.
intev 5y ago
You really don't have to guess, the "How it works" page addresses that with the "prebate". Up to the poverty level is probably a bit too low, but at least that's being considered. You seem quite eager to get the pitchforks out since it doesn't attempt to solve the tax problem in an extreme (your) way.
deleted 5y ago
[deleted]
jfengel 5y ago
The "prebate" is supposed to compensate for that, so that the burden doesn't fall on poor people. But it still means that the middle class and wealthy are paying the same flat rate, rather than the current progressive system. So the effect is to shift the tax burden from the wealthy to the middle class. That's before taking into account the fact that the very wealthy don't spend a majority of their wealth on consumables, so are unlikely to be taxed. That makes it even more regressive. It's a terrible plan that sounds good if you don't think about it too much. It would be equally trivial to have a flat income tax, and only trivially more complicated to have a progressive income tax. It's not progressiveness that makes the tax system complicated. The complications come from the many different things that can constitute "income" and all of the things we want to exempt as beneficial "expenses". None of that goes away when you shift the numbers to the consumption side. You want sales taxes on stocks? Houses? Carried interest? What makes those transfers of money for goods and services different from sales at stores? You'll end up with an equally thick book of rules. It's the kind of plan you come up with when you have no idea why the current system is the way it is, so you just wipe it out and leave others to re-invent all of the complexities that don't show up in a system that has never faced the real world. And it gets promoted by the kind of people who are well aware that it shifts the burden to the middle class and away from the wealthy.
- dragonwriter 5y ago
  > The "prebate" is supposed to compensate for that, so that the burden doesn't fall on poor people. The prebate for a family of four is about the same as the Child Tax Credit for a family with two children., so at zero income they’d have about the same net taxes with “fairtax” giving a effectiv marginal rate on additional work income (given near unity marginal spending) greater than status quo payroll taxes (they would face 0 or negative net income taxes under the status quo because of standard/dependent exemptions and EITC.) So, the burden still falls on the poor, particularly the working poor. > So the effect is to shift the tax burden from the wealthy to the middle class. No, it shifts it from the middle class (or, rather, high-income wage earners) who pay the highest rates under the current system (not capital income recipients, which is the dominant income mode of the truly wealthy) to the poor, who pay taxes at lower income levels and higher marginal rates without significantly greater initial refundable credits. That's even before considering that marginal propensity to consume drops with income (and is near 100% for the poor), and effective marginal rate under fairtax is the nominal rate times marginal propensity to consume. The “fairtax” is “fair” to people who see the poor as “lucky duckies” [0] successfully executing a devious tax avoidance strategy. [0] https://en.m.wikipedia.org/wiki/Lucky_duckies https://en.m.wikipedia.org/wiki/Lucky_duckies

WillPostForFood 5y ago

>The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families.

dragonwriter 5y ago
> The FairTax provides a progressive program called a prebate That's not progressive (the marginal rate is flat, not progressive); its equivalent to a very low UBI [0] + flat tax. Is it better than a flat tax without a “prebate”? Yes. Does the prebate avoid a massive downward shift of tax burden compared to the status quo. No, it doesn't. And that's even before considering the fact that its not revenue neutral and is proposed by people who want to use it as leverage for social program spending cuts. [0] By the stated basis, its a UBI equal to the consumption tax on spending at the poverty line.

intev 5y ago

You really don't have to guess, the "How it works" page addresses that with the "prebate". Up to the poverty level is probably a bit too low, but at least that's being considered. You seem quite eager to get the pitchforks out since it doesn't attempt to solve the tax problem in an extreme (your) way.

deleted 5y ago

[deleted]

jfengel 5y ago

The "prebate" is supposed to compensate for that, so that the burden doesn't fall on poor people. But it still means that the middle class and wealthy are paying the same flat rate, rather than the current progressive system. So the effect is to shift the tax burden from the wealthy to the middle class. That's before taking into account the fact that the very wealthy don't spend a majority of their wealth on consumables, so are unlikely to be taxed. That makes it even more regressive. It's a terrible plan that sounds good if you don't think about it too much. It would be equally trivial to have a flat income tax, and only trivially more complicated to have a progressive income tax. It's not progressiveness that makes the tax system complicated. The complications come from the many different things that can constitute "income" and all of the things we want to exempt as beneficial "expenses". None of that goes away when you shift the numbers to the consumption side. You want sales taxes on stocks? Houses? Carried interest? What makes those transfers of money for goods and services different from sales at stores? You'll end up with an equally thick book of rules. It's the kind of plan you come up with when you have no idea why the current system is the way it is, so you just wipe it out and leave others to re-invent all of the complexities that don't show up in a system that has never faced the real world. And it gets promoted by the kind of people who are well aware that it shifts the burden to the middle class and away from the wealthy.

dragonwriter 5y ago
> The "prebate" is supposed to compensate for that, so that the burden doesn't fall on poor people. The prebate for a family of four is about the same as the Child Tax Credit for a family with two children., so at zero income they’d have about the same net taxes with “fairtax” giving a effectiv marginal rate on additional work income (given near unity marginal spending) greater than status quo payroll taxes (they would face 0 or negative net income taxes under the status quo because of standard/dependent exemptions and EITC.) So, the burden still falls on the poor, particularly the working poor. > So the effect is to shift the tax burden from the wealthy to the middle class. No, it shifts it from the middle class (or, rather, high-income wage earners) who pay the highest rates under the current system (not capital income recipients, which is the dominant income mode of the truly wealthy) to the poor, who pay taxes at lower income levels and higher marginal rates without significantly greater initial refundable credits. That's even before considering that marginal propensity to consume drops with income (and is near 100% for the poor), and effective marginal rate under fairtax is the nominal rate times marginal propensity to consume. The “fairtax” is “fair” to people who see the poor as “lucky duckies” [0] successfully executing a devious tax avoidance strategy. [0] https://en.m.wikipedia.org/wiki/Lucky_duckies https://en.m.wikipedia.org/wiki/Lucky_duckies