What is fair tax all about?

United States
August 9, 2010 3:26pm CST
So, I heard on the radio, people talk about fair tax and they are going to vote for this act. So, what exactly is this fair tax all about? Is it about our government shouldn't take certain percentage of our income tax at all? We should get the complete wage we earn instead of submit 15% to 30% of that tax? Can someone kindly explain to me?
1 response
@owlwings (43897)
• Cambridge, England
10 Aug 10
The 'Fair Tax' is, essentially, a tax on what you spend rather than on what you earn. It is supposed to be 'fair' because everyone is taxed at an equal rate on what they spend (it approaches 'fairness' only if essentials such as food, rates, mortgage, utilities and so on are taxed at a lower rate or not taxed at all). It would, of course, neatly sidestep any issues about aliens and illegal immigrants since EVERYONE who buys anything in the country would be paying a tax, regardless of where they earn their money. It would also get rid of much of the expense of the IRS by making Income Tax returns a thing of the past and, effectively, making every retailer an unpaid tax collector. In the EU we have the worst of both worlds: we are taxed on what we earn but we are also charged 'Value Added Tax' (between 5% and 20%, depending on where you live and what the goods or services are) on most of the things that we buy. As far as I can see, the only 'fair' thing about the 'Fair Tax' is that there is an element of 'swings and roundabouts' ... and you can be sure that it will be the Government who would benefit in the long run!
• United States
10 Aug 10
Thanks for your detail explanation on this matter. I would say fair tax would be focus on the sales tax then. So, we won't be taxed at all from the income tax?
@owlwings (43897)
• Cambridge, England
10 Aug 10
I can't realistically see any government doing away with income tax altogether. I don't know very much about the so-called 'Fair Tax' (except what I have read online) but I think that it's only a quite hazy proposal at the moment.