[US27inKS]

Originally Posted by danjarch

To move the discussion to the idea of the "Fair Tax" itself. It has two major flaws and would gain thousands more if it ever became law. The first flaw is that it still hides the true amount of taxes you pay. That's the biggest reason the government has been able to grow out of hand. Most people think they get money from the government rather then get a portion of what they paid in, back. Unless your self employed or own a business, it's easy to forget that what you see on your W2 under medicare, social security, and fica is only half of what's been paid on your behalf. Then there is the unemployment tax that you never see but is paid on your behalf.

I don't see it that way. The fair tax plan would eliminate SS and fica taxes. The employer would no longer contribute to these taxes. Hopefully most people would see a small raise because of this.

Of course there are plenty more taxes that you never sit down and write a check for, so don't often think about or figure out how much your paying, such as sales tax, exercise taxes, utilities taxes, airport taxes, telecomunications taxes, corporate income taxes, etc.. . All told we pay something like 48 cents out of every dollar we make in taxes. But most of it goes out with out our being aware or having to write a seperate check. The fair tax plan, repeats this existing flaw. Hiding the total amount of taxes paid in your name.

State sales tax would stay. Federal excise taxes would be gone, state and local utility and airport taxes would stay, corporate income tax would be gone.

The second problem is that it creates a major disadvantage on small businesses. Think of a maid service that is state wide and buys it's cleaning products by the truck load, in condensed form. Being able to get a big discount for buying in bulk. It's then increased by being hit with a lower tax bill. Meanwhile a independent person working as a maid, is going to be paying as much as 3 times as much for cleaning supplies, this will be compounded since the tax difference would be again multiplied by three.

In simple terms, if bottle of off the shelf floor cleaner is $6 and the tax is 30% bringing the total to $7.80. Now that big company is only paying $2 for that same amount of condensed cleaner, adding in the taxes it comes to $2.60. So an already $4 disadvantage becomes a $5.20 disadvantage.

The small maid co. would just have to change the way it does it's billing. Buy the cleaning supplies as a reseller (no tax) and include the items on the bill to the customer (customer pays tax), and the maid co. sees no difference in it's profitability vs the big company.

I know it doesn't seem like much, but imagine all the small plumbers, contractors, maids, and other trades that already have to manage to overcome there lack of bargaining power.

When I purchase auto parts, I have no where near the bargaining power of some of the chain stores. That would not change, nor effect my business. I would still buy parts on a wholesale basis (no tax paid) and sell at retail (sales tax gets paid). I only pay sales tax on items that are consumed by my business.

The third fault is that it is in no way safe from being manipulated by congress. As already mentioned they just love trying to use the tax laws to incourage or discourage behavor. You can just imagine what would be going on right now if we were under the fair tax plan. They would be trying to exempt green products from the tax, or trying to give out 6 month exemptions for this industry or that industry.

While no tax law, or any law, is safe from congress trying to modify behavior or give kickbacks to their friends, the fair tax is much more transparent than what we have now. If taxes are raised for any reason, it would be apparent the next time you went to the store. Under our current system, congress can raise our taxes without the general public ever knowing. If they raise corporate tax rates, or add an excise tax on a particular item, all we see is a more expensive product without knowing that the price increase is actually taxes. And the politicians will raise our taxes while telling us they're giving us a tax cut.

The fair tax is not perfect, but do you have a better suggestion for a tax system that's both fair and transparent?