Robert: Who would be harmed by the FairTax?
Robert: Other than people who thrive on the current system?
Todd: Well its different degrees of harm, but there's the probability that those who now pay no income tax pay more. Whether that's right or wrong is beyond me to decide, I'm simply pointing out that they would be adversely affected. That's my whole point that there's no means of collecting from the public that won't adversely affect someone.
Robert: With a prebate to everyone up to the poverty level, it's unlikely people who are not paying now would start to pay.
Todd: That's an excellent point
Robert: The fact is, the Fair Tax is well named. It might actually give a "welfare" effect to the poor, if they are wise about spending money for new goods only on food and buying all they can used.
Robert: They'd actually get some help paying for those with the prebate.
Todd: I think that the prospectg of a Fair Tax is appealling. I think the threat of the "underground economy" is a reasonable concern, and one I'd like to learn more about. I think proponents make sense when the reference existing tax laws. I'd like to read more about the pros and cons of the Fair tax when compared to a VAT.
Robert: What's VAT?
Robert: There would not need to be an underground economy. The FairTax is only imposed on new goods and services.
Todd: Value Added Tax
Robert: And if all income taxes (and federal taxes in general) are removed, then people will have far more funds available to pay the tax that way.
Robert: So what does the VAT do?
Todd: No I understand that, but I believe the critic's point is that you may have a widespread desire to avoid the tax by purchasing the goods as a business rather than from the retailer. The proponents of a VAT argue that this could be avoided by taxing the good throughout the cycle of transactions up to and including the retail transaction. That's just one concern I'd like to learn more about.
Robert: So in other words, tax at each step of the building process to avoid cheating?
Robert: Well, one thing to note about enforcement of the FairTax: with 80% of all tax returns removed (only business would file, no individuals), the government would have more ability to handle oversight and cut out cheaters.
Todd: I think that's a fair argument, plus businesses are already required to have a sellers license to purchase tax exempt goods and the laws are already on the books.
Robert: Exactly, so the VAT complicates things more than necessary, it would seem.
Robert: By moving the tax to only the final transaction, you simplify the market processes and help businesses grow by cutting red tape.
Todd: It's disheartening that only Mike Gravel, Ron Paul (sort of) and Huckabee are the ones talking seriously about tax reform, although to be fair McCain, Romney and Giuliani said they would sign the fair tax act if passed.
Todd: Tax reform is a bipartisan issue because the current system, in my view punishes the working American as much as it does the super-wealthy.
Robert: It punishes the worker more.
Todd: And tax relief doesn't have to be an issue that you cast aside whenever you are talking about promoting a healthy economy or protecting American jobs. Frankly I don't see how they don't go hand-in-hand.
Robert: It pushes out corporations that the working man can work for. It makes the necessary wage so high that people hire illegals to avoid taxes or just move overseas to avoid them legally.
Todd: Tax reform is a middle class issue, frankly, and it makes sense that it should be as important as the Environment or Health Care. This is a complicated system that all pieces fit together.
Robert: That's probably my main irritation with the current "solution" being pushed by the President. It's a one-time tax rebate, giving people back their own money. If that is an answer, why not give back more of the people's money and stop taking it away?
Robert: Absolutely.Robert: And that is also one thing I hate about our current tax system. It gives people the false impression that the government "gives" them something around April every year (if they're among the fortunate folk getting a refund) and they go spend it in many cases.
Todd: This all leads back to the issue of public will. You need public will to accomplish things in government, and to have public will to solve problems, you need an educated public that sees practical realities. I'm not so sure America has EVER been that way.
Robert: Indeed, that is why the framers were so afraid of giving the "common man" the right to vote.Robert: They felt such people could not be trusted to understand what was best.
(to be continued tomorrow)