If the only tax was a national sales tax, then taxes would be based strictly on consumption instead of accretion of wealth.

I don't understand how this could be seen as anything other than the most, base, vile possible shift toward a regressive tax system.

Is it even possible to conceive of a system of taxation more fundamentally regressive than this? Even if the sales tax is "graduated", this still means there is no tax on capital gains, no tax on dividend or interest income, no tax on corporate profits, no tax on the value of your estate when you die, etc., etc. Each of the ways that rich people stay rich and get richer would be taxed at the rate of zero percent.

It means that the poor, who spend every penny they earn, will be taxed at an astronomically higher rate than the rich, relative to their accretion of wealth.

How could any non-rich person be in favor of an idea like this? I don't care how much you love Jesus, you cannot vote for a guy who openly advocates a return to the gilded age unless . . . you're stupid.

Seems to me the main reason progressiveness is valuable is so as not to impose a crushing tax burden on the poorest people in society. The Fair tax's rebate system will achieve that. Meanwhile, what you are complaining about is that the Fair tax would not smack down the filthy rich.

The only logical reason to be worried about this is that this deprives the government of potential revenue. However, the savings from a smaller IRS and the increased productivity in businesses from simpler tax calculations are likely to more than compensate for this lost revenue. Anyway, I think the real reason you're angry about this is not because you want more revenue for the government, but because you think it's unjust to let the rich be rich, even if no harm is caused by this.

I, too, was really disappointed that this article didn't address your problem. Luckily, the creaters of the fair tax plan did- each household gets a "pre-bate" on the taxes that would be spent each month in order to cover basic living expenses (based on the poverty level).

As an example, imagine someone would have to spend 1000 dollars a month to live right at the poverty level. 220 dollars of that would be going towards taxes under the fairtax plan. In order to offset that, that person would get $220 from the gov't at the beginning of each month. Bingo! No taxes at all on the very poor.

I hope that helps you out in understanding it.

In my area anyone making under 50k is poor. Asking them to pay the same tax rate as the guy making 200k is obscene. He will spend every cent while his neighbor rolls in cash.

yes, I'm curious if the proponents of this plan have factored in differing costs of living.  will i get a different pre-bate depending on where i live?  if not how is that fair?  If i'm a student in New York but my family lives in Arkansas do I get the Arkansas pre-bate because that's where I reside according to the school that won't give me instate tuition?  If so, if my family lives in Manhattan but I go to school in Arkansas do I get the Manhattan pre-bate?  Or do I not get a prebate at all because I'm not a full-time worker, meaning that instead of the tax breaks I would currently get because my income is too low, I'm now taxed at the same rate as everyone even though I make hardly any money, so I get to pay back my loans even slower.  If I do get a pre-bate, does that mean everyone over 18 gets one?  So only people working high school jobs that probably are doing
so because their family needs the money get screwed because they aren't 18.  Or is it everyone that has a job no matter how few hours worked gets a prebate, so only the retired and unemployed get screwed.  Or maybe, everyone over the legal age to hold a job gets a prebate, in which case I'll point out that that would cost about 100 billion dollars and I'm not sure you'd like a world in which every 14 year old had the government just give them 4 grand all of a sudden.

Progressivity is important beyond the issue of not burdening the poorest. Progressivity done properly makes the tax system "fair" by imposing the same LEVEL of pain on everyone. In economic terms that means that the "marginal utility" of the last $1 that you pay in taxes is equal across all payers.

If you use a flat tax or a consumption tax, then you encourage less efficient expenditure and allocation of economic resources since it has been demonstrated time and again that the wealthy spend very inefficiently.

No they have not. There are lots of things they are missing, but it doesn't matter because its a scam of a plan anyway.

Wpeotih:

yes, I'm curious if the proponents of this plan have factored in differing costs of living.

I'm not trying to defend Huckabee's plan in any way, but the fact is that the current federal tax code doesn't take that into account in any measurable way either. It's actually getting to the point where it punishes those with the audacity to live in the more expensive places since some deductions are on sliding scales which eliminate them at income levels which are hardly affluent in several metro areas, and the home mortgage interest deduction doesn't apply to any loan over $500k (which is enough to buy a whole town in some states, but would require a buyer to make up to a 70% down payment on a median condo in NYC).

Indirectly though the current system does. Local taxes are deductible, and local taxes will be related to the local cost of living.

until fairly recently, only certain types of local taxes are deductible, and in many cases locales with the highest taxes also have the highest costs of living.

The one thing that's always baffled me about state and local tax structures is that it seems like the more "progressive" a state is politically, the higher its sales tax and some other taxes which can end up being quite regressive in their impact. (Oregon is a notable exception to this, and I've heard that Vermont also has no sales tax, but Washington state has a tax structure which increases the price of everything, in turn amplifying the impact of their very high sales tax). Also sales taxes/VAT's seem to be fairly prevalent in some of the more socialist industrial nations.

WA tax law is stupid. In part is because Income Tax based revenue can only be done at the State Level, so local jurisdictions are left only with Sales Tax and Prop Tax.

VATs in theory are different than straight sales tax. VATS in theory tax the productivity in any particular step. So theoretically they encourage capital intensive industries to be on equal footing with inventive or labor intensive industries. But you are right, it doesn't work out that way.