Technology with attitude

Is The Fair Tax Really Fair?

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This is the “new idea” Huckabee is hawking as fiscal policy, and on its face it seems like it could be interesting. After all, everybody pays the same rate and its based on your consumption. But does it ultimately prove to be impractical and unfair?

Here’s the proposal…

The tax plan Huckabee has proposed, called the “FAIR tax,” would eliminate federal income and investment taxes and replace them with a 23 percent federal sales tax. The poor would pay no net sales tax up to the poverty level, and every household would receive a rebate equal to sales taxes paid on essential goods and services.

First off, what are essential goods and services? That seems like a mess waiting to happen because it will mean that a few lawmakers will have to decide what is “essential.” That doesn’t seem very “fair.”

So color me extremely skeptical, not only for that reason, but also for this…

Scott Sweezey, a programmer at the plant who lives in Bristol, said he doesn’t know how to make a consumption tax treat people fairly.

“Low-income or retired would pay the same tax as somebody who has a million dollars,” Sweezey said. “I guess if you don’t buy anything, you don’t pay any sales tax, but if you do buy something, you pay sales tax.”

And that’s the rub. On its face it looks fair, but one of the most common tax rates among the middle class is 15%. That gets bumped up to 23% and you’re raising taxes on an income class that’s already diminishing. Also, since the rate for higher incomes is between 28% to 35%, they’re going to get a great deal from this change. But that’s essentially regressive taxation and that’s REALLY unfair.

Another thing, I doubt that Huckabee is going to cut out the tax breaks for mortgage interest, which is where a lot of people lessen their tax burden. That would be folly as a national policy, but if he gets rid of the IRS and the tax code, mortgage interest tax cuts go away too, right?

I also think Huckabee saying that the IRS will go away is naive…because who is going to enforce and punish the tax evaders? Like it or not, even if we have a so-called fair tax, people will still try to avoid paying their taxes. Where does that burden fall? The police? A new government agency?

Here’s another perspective…

Ken Schuhle, a Navy veteran from Dover, said it would eliminate loopholes that rich people exploit. “That way, everybody pays our share,” said Schuhle, who listened to Huckabee speak during lunch at the New Hampshire Veterans Home in Tilton.

So what we’re left with is a big question mark as to whether or not this is a good idea. Personally, I’m not liking it, but here’s the wikipedia page on the FairTax. Read it and tell me what you think.