Carter introduces Fair Tax Act

What is Fair Tax? Its not a new concept, and Mike Huckabee ran on it in 2012. It would basically eliminate income tax, and instead add 30% (23% + 7% SS) sales tax on everything you buy.

Key Takeaways
https://www.thebalancemoney.com/what-is-the-fair-tax-plan-pros-cons-effect-3305765

• The Fair Tax plan is a 23% sales tax that would replace the current U.S. income tax.
• It would reduce the headache of annual tax preparation because it's simple, but it would raise the tax burden for 90% of taxpayers.
• Only the top 10% of incomes would actually see a tax cut.
• It was first introduced to Congress in 1999 and has been reintroduced several times over the years.

A 23% sales tax is regressive because it impacts the poor the most.

Advantages

• Eliminates annual tax preparation the headache and associated costs
  
  
• Eliminates the IRS
  
  
• Boosts income and possibly consumer spending
  

Disadvantages

• Unfair to seniors who have already paid income taxes
  
  
• Needs a new agency to enforce it
  
  
• Sales tax rate would likely be prohibitively high to replace lost revenue.
  

Carter introduces Fair Tax Act
https://buddycarter.house.gov/news/documentsingle.aspx?DocumentID=10824
WASHINGTON, D.C. – Rep. Earl L. “Buddy” Carter (R-GA) today introduced H.R. 25, the Fair Tax Act, to replace the current tax code with a national consumption tax known as the Fair Tax.

“Cosponsoring this Georgia-made legislation was my first act as a Member of Congress and is, fittingly, the first bill I am introducing in the 118th Congress,” said Rep. Buddy Carter.

 

Maybe it could be adjusted to make it less regressive. Obviously staples would need to be exempted from it, which would help a lot. The actual rate could also be brought down and perhaps made up with other taxes that target the wealthy more. I mean, why not go back to the kind of income tax we used to have, which did only target the wealthy? Do that and have the sales tax to make up the rest.

 

Its believed the rate would actually need to be brought up to make up for the shortfall

From the same link

 

Maybe the states could make their income taxes work without the IRS doing the heavy lifting for them. Otherwise, yes, that presents a problem for them. Several states do get by without state income taxes, though, so I imagine the other states could make it work one way or another.

 

It is also highly regressive, and a non starter. IMO, it is a Trojan Horse for a value added tax (VAT) like in Europe.
It has merit, but it will require another “Book of Favors” putting the middle class back where it always lands: holding the bag.

 

A consumption tax would only tank the economy, since consumption is the main thing we provide with world with at this point.

 

All that's gonna do is ramp up blackmarket sales. For instance, I just got a 4080 graphics card for 1100 bucks, why would I go to an authorized place and pay an extra $350+ bucks when so many opportunist are willing to undercut thanx to this new insintive to sell "lost inventory".
People are just gonna report everything stolen all the time, and sell it tax free.

 

Yes, I think people would find tons of ways to get around it, and they would have to hike the rates to make up for it.

 

Its a VAT on steroids, because in Europe they use VAT as an additional tax to fund social services, but in this case they want to collect sales tax to fund ALL expenses.

 

We could talk about reducing the income tax and partially replacing it with something else, but a complete elimination of the income tax is probably too extreme to be seriously considered or politically viable.

Many conservatives would still oppose the idea of this hybrid compromise out of fear that the income tax would not end up getting reduced, and now instead government would just have another avenue of taxation open to it, which would inevitably lead to more taxes.

 

when a small group is the only victims of a certain tax, there is no reason-politically-=to not keep increasing the rate/ when everyone suffers a tax that serves as a strong check on abuse by big spending politicians

 

The wealthy would likely be paying a bigger bite anyway. They wouldn't be buying WalMart jeans at $20, but designer jeans at $200 a pop. Luxury vehicles, boats, high end foods.... all the things most people don't buy. That would make up for some the difference.

 

HR 25 is another 'bill' headed for the shredder.

A waste of time and energy.

Regards, stay safe 'n well.

 

Bigger bite in terms of total $$ spent in taxes, but the lower income folks would pay a bigger bite in terms of % of their income which goes to paying for taxes. This is why it's called regressive tax.

 

I'm not arguing that point, but even the lower income folks need to have some skin in the game. If not, then it still isn't a 'fair' tax at all, if the larger percentage of 'participants' aren't contributing.

 

politicians love it when that happens. they buy the votes of non-taxpayers with handouts. The trick is to have more voters they can pander to, than those who get hit with tax hikes

 

Sure. Heck, even drug dealers and hookers would pay tax when they buy everyday things. However, the point about this hitting lower income brackets harder is still true. That is usually the argument which defeats the Fair Tax proposals.

And politicians buy votes by promising people lower taxes or no taxes at all. Who do you think cut their taxes to zero? First they cut their taxes to zero, and then they call them leeches for not paying any tax. Only in United States of Absurdia. Besides, being a zero-taxpayer does not guarantee handouts. As a matter of fact it guarantees nothing but zero tax. Keeping your hard earned money......!

 

Another tax idea floated from time to time is the 'flat tax'. It's levied on income.

Curiously, I've yet to see a congressman or congresswoman from either party suggest a flat tax on wealth. It would have the advantage of eliminating the need for a 'pass' for the very poor.

Regards, stay safe 'n well.

 

a flat tax would be better, this hits the lower class harder than the rich

 

As I understand it, the Fair Tax has a prebate. Tax is "prebated" up to the poverty level to be sure that poor people pay no net tax. Further, tax is only assessed on "new" goods. You can buy a used car and pay no tax, for instance.

 

It's not "curious" at all. It's a very dumb idea.

Tax the money when people get it, not over and over again because they choose to save it.

 

that's why transactional or use taxes are the best option.

 

how so, each person pays the same percentage. the rich pay far more but it limits the pandering the government can do.

 

It could always be possible to exempt taxation below a certain level.
For example, all individual people would not have to pay the first $4,500 of tax, but above that they would have to pay.

But that might make things more complicated. Those who chose to pay in cash would have to save all their receipts to be able to get a refund at the end of the year.

Or if you combined sales tax with income tax, we could just exempt all people who earned less than, say, $20,000 from paying any income tax. The amount of tax they would end up paying would end up being similar to what it is now, when what they paid in sales tax is combined into the equation.

On the plus side, such a tax strategy would also incentivize lower income people to save.

 

Yes, the 'new vs used' is a selling point for the proposal. You can bring down your tax burden by buying second hand goods, especially with big ticket items. I'm afraid it would get to a point where manufactures would have a hard time selling brand new items, but they could get around it by putting 100 miles on a car and sell it as second-hand.

Combining them is the European model. That's how they fund universal health care etc (by adding VAT on top of income tax).