NationStates Jolt Archive

What do you think about a fair tax? It's basically when you remove income taxes completely, but you jack up sales taxes really high, to balance it out.

What do you think?

I don't know the specifics about the specific "Fair Tax", I really should get Bortz's book.

But I like the idea in general.

What do you think about a fair tax? It's basically when you remove income taxes completely, but you jack up sales taxes really high, to balance it out.

What do you think?


I support it completely. No more loopholes for the rich. You are taxed not by what you make - but what you consume.

I guess that would be fair, except to us abstemious freaks who try not to buy ANYTHING more than what we absolutely require.......what about us?

Actually, taking that into consideration, I think I support it even more.

A national sales tax (I'll skip the term fair as there's nothing fair about it) would tax hardest those who have the least. There are goods that are needs and those that are wants. We all buy the needs. The more disposable income you have the more wants you buy. So the cost of living for the poorest would go up exponentially. While the richest would be able to afford their luxuries more easilly. Actually they could save a lot of money by merely saving and not investing capital. Effectively the best way to reduce your taxes under such a scheme would be to save money and not spend it. So those that have the most would spend the least and those that had the least would have less to save from taxes.

Please make public polls on threads like this one.

I love public polls if we are to vote and express our diffrent views on NS, I think it should be through public polls.

I have seen many good threads like this one with no poll at all, this thread needs a poll, public or private.

I dont know what I would support but other tax systems
should be considered.

A national sales tax (I'll skip the term fair as there's nothing fair about it) would tax hardest those who have the least. There are goods that are needs and those that are wants. We all buy the needs. The more disposable income you have the more wants you buy. So the cost of living for the poorest would go up exponentially. While the richest would be able to afford their luxuries more easilly.

The Fair Tax itself exempts a lot of "needs" spending, actually. I haven't read the Fair Tax site (or other info on it) for a while, but I don't think that this argument flies in this case.

There is nothing unfair about a graduated income tax to begin with, so something that shifted the proportional burden towards people with less money even one iota is almost by definition un-"fair."

There is nothing unfair about a graduated income tax to begin with, so something that shifted the proportional burden towards people with less money even one iota is almost by definition un-"fair."

Yep.

As a side effect, people will consciously spend less and it will hurt the economy.

I dislike it because it makes illicit trade(drugs, pirated movies and games, etc) cheaper in the long run.

If the sales tax were of sufficent ammount, it would mislike me. As Chellis just alluded to, a sales tax much over 10% will create a grey market, and a one over 20% would create too large a grey market. A 20% sales tax would have me changing my profession to smuggler.

As a side effect, people will consciously spend less and it will hurt the economy.
They would have to exempt certain things from the taxation to stimulate investment, otherwise you're right, the economy would grind down to a snail's pace.

I support it completely. No more loopholes for the rich...

and therein lies the biggest flaw: the governement can still manipulate the tax rate to benifit the well off, ie high end goods such as plasma TVs and cars can have lower tax rate while essentials like food and cloths are lower. Yes it would be much more transparent, but would i believe be inevitable with a pro-wealthy government (and reversed in more socialist countries)

The Fair Tax itself exempts a lot of "needs" spending, actually. I haven't read the Fair Tax site (or other info on it) for a while, but I don't think that this argument flies in this case.

Say you took off food and housing. Then instead of a needs tax it would be a 'get ahead' tax. A tax whereby if you wanted to stay poor you were safe buut the second you wanted to invest in getting better off the taxes would kick in. Still the big winners would be the wealthiest just like under the graduated tax system. If you make 100 million a year and you spend 1 million a year then you are taxed, under a 'fair' tax, only 10% of your earned capital.
Under such a scheme the best plan for those who have money is to invest in high return and then spend as little as possible. While it is easy for the wealthy to spent only a small percentage of their capital it leaves most of us unable to compete.

Under such a scheme the best plan for those who have money is to invest in high return and then spend as little as possible. While it is easy for the wealthy to spent only a small percentage of their capital it leaves most of us unable to compete.

Indeed. Another problem would be investors and businessmen, etc. earning their money without income-tax in the "fair tax" country...then moving overseas to retire at a young age once they had accumulated enough funds to go and live off the profit - without having to pay any income tax in the host country (as they aren't employed) or having to worry about the large sales taxes in their original home country. It would stimulate brain-drain on a massive scale.

Well after earning it why not stick around? Another country might tax the dividends. While in a 'fair tax' country you can leave it in the bank or your portfolio earning for you and only pay taxes when you want a bigger yacht. The main problem is a 'fair tax nation will produce less wealth. Look I'm a general contractor. I make my money because people need things made and they have money to pay me. Now If everytime a client buys my service he's going to have to pay tax on it too where is he? A lot less likely to buy in the first place. Jobs and businesses grow because people are willing to pay for them. If you tax spending you put a dissincentive on it.

any flat rate tax that taxes the citizen the same amount whether they are rich or poor is a regressive tax favouring the rich.

if needs are indeed made exempt then this pushes the tax more towards the progressive plain, granted

however this still misses one of the primary goals of government out: wealth or income redistribution - something which all governments engage in whether you like it or not


probably worth noting that in the UK we have this flat sales tax called VAT, standing at 17.5% on all items (excluding most foods, baby goods (clothes, etc), books, and a few others)

Well after earning it why not stick around?

Well, if your average person had the opportunity of effectively almost doubling their income for several years and then retiring to a country at an early age...a country where the goods are half the price while having the same or similar standard of living, they probably would.

Another country might tax the dividends. While in a 'fair tax' country you can leave it in the bank or your portfolio earning for you and only pay taxes when you want a bigger yacht.

Yeah, but assume they sold off their stock and had cash only in the bank. That's untaxable.

The main problem is a 'fair tax nation will produce less wealth. Look I'm a general contractor. I make my money because people need things made and they have money to pay me. Now If everytime a client buys my service he's going to have to pay tax on it too where is he? A lot less likely to buy in the first place. Jobs and businesses grow because people are willing to pay for them. If you tax spending you put a dissincentive on it.

Yes, as i've already stated. People aren't going to pay $200 for Good/Service A if it used to cost $100, even if they aren't paying tax.