Fair Tax is a push to reform the federal tax codes, that are very over complicated and bias towards many groups of people. They are pushing for a “flat tax”, meaning that one fair tax is charged for retail goods, and all other taxes would be eliminated. It has spurred quite the debate, probably due to the large effects it would have on our economic and government systems. In order to form an educated opinion on this matter, it is important to understand the arguments from both sides.
4 Pros of Fair Tax
1. This Eliminates Income Taxes
Fair Tax will eliminate the federal income taxes, and place a broad national consumption or retail sales tax. Through the revocation of federal income taxes, internal revenue service will cease to exist.
2. Businesses are safe
This fair tax will not charge companies for making more jobs and expanding, investing in development and research or doing charity deeds. All existing government services will go on to be completely funded, like Medicare and Social Security.
The fact that Fair Tax is a consumption based instead of an income based, resident will be capable to exercise a specific amount of control in excess of the amount of tax they disburse.
3. Reduce Tax Evasion
Tax evasion will be lessen as people who presently stand form paying income taxes and draw from their income from other sources will be taxed instantly every time they bought new services and goods.
The cost of services and goods will be lower as the embedded prices of the existing income tax plan will no longer a factor.
4. Knowledge on Wasteful Spending
A nationwide sales tax like this is more transparent compared to the existing tax system. American people will be capable to know the amount of taxation, and with anticipation lessen on wasteful spending, inefficiency and corruption in the government.
3 Cons of Fair Tax Act
The factors all lined up might make the plan seem to be relatively a deal but prior to deciding American people must also check the argument which is made opposed the tax system.
1. Ruinous for the Economic Liberty
What will happen when the income tax is not completely repealed as expected? Future Congress or even future presidents that choose to replace some portion of the tax code? People can end up with nationwide sales tax. this tax will be catastrophic for the economic liberty.
The proposal for nationwide sales tax is not indexed for inflation that means inflation enhances the bases cost of products and services will also augment.
2. Disbursed SS Double Taxed
Those who have disbursed into the SS or Social Security and exclusive savings account for their retirement will be efficiently double taxed if they start withdrawing their cash and spending it, as all the cash they have controlled to save up have been taxed in the existing tax system.
3. Enhanced Price for Products and Services
The price of new services and products will increase, and obviously higher costs can have a significant impact on the financial situation.
There pros and cons about fair tax that requires careful consideration prior to permitting the government to make the decisions. When mistakes are done in permitting this law, there can very possibly be awful repercussions in the years to come.