I checked this link out, and it’s a great policy in principle.
It’s definitely not run by salespeople, though. There’s no viable roadmap to get to this point, which in a government as large as ours, would probably take a generation, and certainly longer when the home page is SWAT dressed IRS agents. Any elected official that brings this website and concept up on the floor of Congress would be roundly branded an extremist and the idea would be thrown out with the representative. Next, we’re dealing with a large bureaucracy with many internal vested interests - you’re not getting rid of the IRS without an equal or greater agency gaining that power (hence my thought on empowering state collection of federal taxes). Last, economically, the US must adopt it in a phased approach to retain our overall economic markets and whatever strength we have left (otherwise we risk a very large disinvestment to economies and markets deemed “more stable”).
At best, a change this significant would take ten years. If someone can detail how we would transition from our current model to another one like a national sales tax, and do so in a methodical way across ten years, I’d sure love to hear that. Yes, I admit, my earlier suggestion certainly needs meat around that bone…which is why I posted it, so that hopefully the idea could get some help from others in this regard.
I asked an AI to sum up what i know about the Fairtax plan. Here is what X’s Grok had to say about the history of the Fairtax plan: The FairTax plan, as found on fairtax.org, has its roots in the mid-1990s, when it was conceptualized by Americans For Fair Taxation (AFFT), an organization founded in 1995 by three Houston entrepreneurs. The plan was developed as a nonpartisan effort to replace the complex and often criticized U.S. federal tax system with a simpler, more transparent national retail sales tax. Here’s a brief overview of its history:
Conception and Development: The idea was to eliminate all forms of federal income taxation, including personal income tax, corporate income tax, payroll taxes, capital gains, and estate taxes, and replace them with a single-rate national sales tax on new goods and services.
Legislative Journey: The FairTax plan was formulated into legislative proposals, notably introduced in Congress as the “Fair Tax Act.” Since its first introduction, it has been reintroduced in various sessions of Congress. For instance, it gained attention in the early 2000s and has seen variations of the bill presented in Congress multiple times, with the proposal to replace the IRS and all federal income taxes with a 23% sales tax.
Public and Political Response: Over the years, the FairTax proposal has sparked significant debate. It has garnered support for its simplicity and potential economic benefits, like encouraging savings and investment by taxing consumption rather than income. Critics, however, have questioned its feasibility, the actual tax rate needed for revenue neutrality, and its impact on lower-income individuals.
Key Features: One of the standout features of the FairTax, as promoted, is the “prebate” system, where all Americans would receive a monthly advance refund to offset the tax on basic necessities up to the poverty level, aiming to make the tax progressive in effect.
Recent Developments: Into the 2020s, the FairTax has occasionally resurfaced in political discussions, especially during debates on tax reform. For example, there was mention in early 2023 of the Fair Tax Act getting its first-ever floor vote in the House, indicating ongoing, albeit contentious, interest in the concept.
Cultural and Political Impact: The plan has been both praised for its radical simplification of the tax code and critiqued for potential distributional impacts, with discussions often reflecting broader ideologies about taxation, government size, and economic fairness.
The FairTax plan remains a theoretical alternative to the current tax system, championed by those who argue for a consumption-based tax system’s fairness and economic efficiency, although it has yet to be implemented due to various political, economic, and practical challenges.
Grok also gave a easy to understand pros and cons list: The FairTax plan, as proposed, has several pros and cons which have been debated extensively by economists, politicians, and the public:
Pros:
Simplicity: One of the most significant advantages is the simplification of the tax code. With a single rate for all consumers, it eliminates the need for the complex income tax filing process, potentially reducing compliance costs and the need for tax preparation services.
Economic Growth: Proponents argue that by taxing consumption rather than income, the FairTax encourages savings and investment, which could lead to greater economic growth. Businesses would also be relieved of corporate taxes, potentially making the U.S. more attractive for investment.
Border Adjustability: The tax would inherently be border adjustable, meaning goods exported would not be taxed, and imports would be taxed at the same rate as domestic goods, potentially making American products more competitive abroad.
Prebate System: To address regressivity, the FairTax includes a “prebate,” where every household receives a monthly check to cover the tax on spending up to the poverty level, making the tax progressive in practice.
Transparency: Consumers would see the tax they pay with every purchase, potentially leading to greater tax awareness and scrutiny over government spending.
Elimination of the IRS: With no income tax, the need for much of the IRS’s current operations would be obsolete, potentially leading to significant government savings.
Cons:
Tax Rate Debate: Critics often argue that the proposed 23% (inclusive) sales tax rate might be too low to be revenue-neutral. Analysis suggests that the actual rate might need to be significantly higher, potentially around 30% or more when calculated inclusively, to replace current federal revenues.
Transition Challenges: Transitioning from an income-based to a consumption-based tax system could be economically disruptive. There’s the issue of fairness regarding wealth accumulated under the old tax system now being taxed again when spent.
Regressivity Concerns: Despite the prebate, there are concerns about how the tax would affect lower and middle-income families, who spend a higher proportion of their income on goods and services.
Impact on Prices: The introduction of such a high sales tax could lead to higher prices, potentially reducing consumer spending power, at least in the short term, which could affect economic stability.
Evasion and Black Market: A high sales tax could encourage tax evasion, black market activities, or a shift towards buying used goods (which are not taxed under the FairTax plan), thus reducing the expected tax revenue.
State and Local Tax Issues: Integrating state sales taxes with a federal sales tax could be complex, and there’s the question of how states would adjust their tax systems in response.
Political Feasibility: The dramatic shift from income to consumption tax has been politically contentious. Many are skeptical about the government’s ability to repeal the income tax amendment (16th Amendment to the U.S. Constitution) and implement such a sweeping change.
Impact on Housing and Services: New housing construction would be taxed, potentially increasing home prices, and services (which are often not currently subject to sales tax) would see a price increase, affecting sectors like healthcare, education, and finance.
The debate over the FairTax plan encapsulates broader discussions on taxation philosophy, economic policy, and social equity, making it a continuously contentious topic in fiscal policy discussions.
Wether we use this or a flat tax plan, something needs to be done to unburden the average Citizen from the current system.
Thanks for reading
this is the issue at hand like most federal corruption. In 1913 one of the most racist and worst presidents in us history FORCED the 16 amendment on the states by declaring it was amended much like the 14th. was by excuvitve order. HINT the 14-17th were forced on the states by DC. (most do not know the 14th amendment was forced on the states after out right rejecting it by William H. Seward! do your own research to find out who he was. another thing most do not realize is washington DC is the child of the states. The states are parent in this relationship. I ask who has the power in this relationship? dose the defiant child or the parent? now back to 1913 the rothchild family that owns MOST of the banking systems in the world slid money into the pocket of Woodrow Wilson and just enough senators to swindle the states into the federal reserve banking system during a session so close to Christmas most were not even there for it when voted on. both the federal reserve debt system the IRS and the 16th amendment had no chance of being defeated. again article v of the us constution was ignored once more. what is article you ask? The Congress, whenever two thirds of both houses shall deem it necessary, shall propose amendments to this Constitution, or, on the application of the legislatures of two thirds of the several states, shall call a convention for proposing amendments, which, in either case, shall be valid to all intents and purposes, as part of this Constitution, when ratified by the legislatures of three fourths of the several states, or by conventions in three fourths thereof, as the one or the other mode of ratification may be proposed by the Congress; provided that no amendment which may be made prior to the year one thousand eight hundred and eight shall in any manner affect the first and fourth clauses in the ninth section of the first article; and that no state, without its consent, shall be deprived of its equal suffrage in the Senate. the last section that no state, without its consent, shall be deprived of its equal suffrage in the Senate. was ignored yet again. by excluding senate members on this issue and the states its not a real amendment.
I like the national sales tax idea and would also propose investigating flat or fair tax ideas. This would bolster the idea of DOGE as it would radically reduce the size (and cost) of the IRS machine.
A panel of over 9 economists, and $22 million in research, led years of research on the best implementation of a consumption tax. The FairTax was what came out of that research. Each of those cons have been researched and answered. The 2nd book on the subject: FairTax: The Truth covers then well. Highly recommend.
I agree completely. Every person, man, woman, child, young and old benefit from government services. Everyone should have skin in the game and take away the power and graft of the politicians. They could not print money and spend more than they take in. In reality with everyone and no deductions the amount taken in should be increased from the present system and the rate should lower. Make the states be the overseer and responsible for collection and reporting. Far too many luxury items are never taxed . It should not be taxed at the production level but at the consumer sale level. This coulod be a boom for reducing the amount and size of government .
What part of my original stance did you not understand? Effectively, there is no “Corporate Tax”, the end user pays all taxes. Companies don’t pay taxes out of their profits it’s a business cost that is added to the price of the product being sold.
The list of replies is way too long to go through, so this reply may be the same as some others. The way the taxation is run now, it is way too cumbersome and time consuming. I think I remember reading that the GE corporation tax return was some 20 thousand pages. If the tax bill could be put on a post card, think of all the time saved all the money saved and put to good use. All the tax lawyers, all the business taxes, all the tax return software, advisors etc. may have to get a job that actually adds to the gross national product in a productive way. The current way is just post hole digging and filling it back up. A waste of time and money. We are talking hundreds of billions of dollars saved for things we really want and need. The best reason, however, is that if the politicians want to raise taxes, it is simple to understand and we know immediately how much it would cost us. They would have to tread lightly.
I think sales tax is the second best option the first best option would be tariffs on All imports hi tariffs on All imports that would keep you from paying a sales tax on a home build because that’s being done in the United States or on buying a home you wouldn’t be paying a sales tax on that because it’s made the United States. If you bought American cars you wouldn’t be paying sales tax on those because they’re made in the United States I think we should go with high tariffs first and then a smaller sales tax if necessary
Out of curiosity: is this a primarily Libertarian position? Where do Republicans and Democrats typically stand on this idea? Do you have access to any polling on this issue?
I agree but I would take it a step farther and every person should pay the same federal sales tax and each state could decide what percentage their state should pay. You spend more, then you pay more.
I’m all for this! I would like to see a stipulation for those under assistance programs, such as food stamps or WIC, where they are tax exempt from grocery items.
It’s still in the “educating the public about the issue” phase. It’s been around a longish time now but still so few have heard of it.
Generally speaking this is a Republican measure as part of the whole “smaller government and constrained government is better government” ideology.
Polling does exist but I am not sure how much the information is worth atm because as with most things, the details matter a lot, and I don’t believe hardly anyone in the public understands the details yet. It’s just sticker shock at “30% sales tax” because the policy is intended to be revenue neutral to the budget.
When the “Fair Tax”, which seems to be the most developed, specific, policy proposal https://fairtax.org/ is polled the predicted effects by various groups are split showing there is little agreement on what the effects would be. I think the information disparity correlates to the poll results.
I think Democrat leadership fears eliminating the treasure trove of information and ability to target their political opponents by weaponizing the IRS. Or said another way, “tax evasion” would no longer be a tool in the prosecutorial arsenal (Al Capone anyone?). I wouldn’t be surprised if the DOJ likes to be able to request tax filings when launching criminal investigations; this would also be gone. I think these effects do influence support in D.C. party leadership even if it doesn’t generally influence the general public.
please god no sales tax on stock purchases. do not listen to this citadel intern. buy stocks guys, invest in the companies you believe in, VOTE on changes to that company to keep it from spiraling into another “profits above quality/safety/customer satisfaction” mega conglomerate.
