Personally, I think that one can't dismiss the current system of collecting taxes summarily. For starters, many current taxpayers depend on the mortgage interest deduction to assist them in affording their homes. Many current taxpayers also show further generosity in donating to charities because in doing so they can reduce their tax load; eliminate income taxes and you eliminate the reason for donors to be so generous. Doesn't eliminating income taxes also eliminate the advantage of investing in tax-free municipal bonds, a method used to maintain the infrastructure of many communities?
If it takes a bureaucracy to refund the Fairtax to poor and middle income people monthly then those folks who make up that bureaucracy can be shifted over from their jobs at the IRS, keeping administrative expenses and salaries higher than projected but eliminating a huge group who would otherwise be unemployed. Isn't saying these people will be able to find "plenty of new jobs" because of a "projected 10.5 percent growth in the economy" a pipe dream? No doubt many will be seeking a way to become a "business" under the Fairtax proposal, thereby eliminating having to pay the Fairtax and at least keeping all the accountants and lawyers who devise loopholes busy.
What about the not so scrupulous mom and pop stores that collect state sales taxes now that find a way not to send all of it to the government? Are they going to have more tax money to play with? What government agency is going to monitor them?
In explaining how consumption is a reliable source of revenue, the Fairtax proponents do not address the hardship faced by people outside of the poverty line with reduced income or no income at all, paying no income tax, and seem to suggest that they can use their savings that otherwise might be needed for other things to pay for a tax on essentials.
Isn't it very theoretical that the final cost of retail goods and services after the FairTax will remain very close to the same levels found in the marketplace today? Doesn't a certain lack of competition through a consolidation of big business keep prices artificially high no matter how much money might be provided through the elimination of corporate taxes? Assuming that the costs of goods and services are inflated by the addition of a national sales tax, isn't it silly to suggest that poorer people would be able to afford buying a house, a monster that requires an unusual amount of goods and services to keep maintained?
Most local entities at least require a vote of the people to raise sales taxes. Voters won't be able to determine whether a national sales tax should or should not be increased. The voting process doesn't seem to be terribly effective in stemming the huge deficits that continue to mount. Would the sales tax need to be raised daily, monthly, yearly to keep up with spending? How does that keep the final cost of retail goods and services close to the same levels found in the marketplace today?
Isn't saying that "corporate tax [which they want to eliminate] only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement" shallow thinking? How are these Fairtax proponents able to attribute "free market competition" for lowering the costs of goods and services under their system but not under the present one? Under the present system and in spite of "hidden taxes" corporations like Wal-Mart seem to have raised the standard of living for many poorer folks by being able to make many of their goods affordable. Isn't a tax on the imports, such that Wal-Mart sells, meant to make them costlier and allow domestic products to be competitive?
"Our baby boom generation has been trained to spend money before inflation eats it up or savings is taxed away" was a comment made by the FairTax proponents before they assumed that others will see fit to save their "extra money" in banking institutions. If interest rates drop as they say they will, so, too, will the interest paid by the banks to savers. What would be the incentive to save money?
Who are these Fairtax proponents anyway? Are they folks ready to collect on their current tax deferred investments that would not be taxed by the Fairtax proposal? A windfall for them!
And "no state is required to repeal its income tax" says plenty without further comment.
Commentary by Sarah Findley
Kansas City, KS