I typically like to keep my posts technical, but Chris Breisch pointed out a description of Fair Tax on Wikipedia and I just had to share it. If for nothing else than to keep track of it for sharing in the future. I'll be the first to admit that I'm not all that big on politics. I'm always up for a debate and can argue my side to a certain extent, but I just don't try to keep up with politics that much. The idea of Fair Tax is one of those topics. For those new to the idea, basically, it says that we should abolish all taxes (and ultimately the IRS) and instead have a universal 23% inclusive sales tax -- by inclusive, I mean what is now $100 + tax would then be $100 after tax. What this means is that you wouldn't have all of that money taken out of your paychecks. Instead, your taxes would be paid for by what you spend. This means that, if you don't spend money, you don't get taxed... well, almost. Granted, this is just my personal view of it after skimming the description, so I may be way off. I would love to hear from people who've actually studied the concept before. I honestly think it would work out rather well. Yes, we'd pay more for our stuff because of taxes, but we'd be getting paid more for the work we do, which would more than even out. I know that I, personally, would be gaining a LOT of money that's going to the government, now.
Here's another point to think about: tourists. Typically, tourists will come to the US and purchase goods and services, which will be taxed, depending on the location. Now, let's just think about how many tourists we have coming into the country every day and how much money they spend. I have no idea what those numbers are (and don't really feel like digging for them), so let's just say 100,000 people come to the US and spend $50 a day for 5 days. Now, let's assume sales tax is 9% in the region they're visiting, which is probably a good average. Currently, this would be $25m in business earnings and $2.25m in taxes. With Fair Tax, that would be $19.25m in business earnings and $5.75m in taxes. This more than doubles the earned taxes, which goes to making our lives safer and better. Of course, we all know that every business would raise their prices to cover the money they'd lose, so the current $50/day would probably have to be about $65/day, which would result in the $25.025m and $7.475m in taxes. It just keeps getting better. I'm sorry, but I'd live with the 2-3x sales tax hike for more money in my pocket. To know how it'd affect you, you really need to know and understand your spending habits, tho.
I'm not going to get into it any more. If anyone knows of any good research into this topic, I'd be interested to see it. I really think the concept is pretty good.