Pros and cons of the Fair Tax law

[ad_1]

Let’s start looking at what the Fair Tax law. The Fair Tax Act, the tax is designed to replace all federal income taxes. The program was created by Americans for Fair Taxation, the advocacy group formed to change the tax system, this group says that along with economists, it developed the plan and the name “Fair Tax”, based on the demands of the public. Because the word “fair” is subjective, the name of the program has been criticized as misleading advertising of some, while being presented as true to the name of others.

The Fair Tax Act has a lot of arguments going both ways, some of which are for it while others are completely against it. The following are some arguments Fair Tax Act

  • federal income taxes will be completely eliminated, and instead of one broad national consumption tax on retail sales.
  • By repealing federal income taxes, the IRS would basically cease to exist.
  • The Fair Tax will not penalize companies to expand and create more jobs, to invest in research and development, or give to charity.
  • All existing service authorities will continue to be fully funded, such as Social Security and Medicare.
  • Because this tax is based consumption rather than income-based, people will be able to exercise a certain amount of control over how much tax they pay.
  • Tax evasion decreases because people who currently resisting paying income tax and gain their income blacks market would be taxed automatically at the point of sale when they buy new products and services.
  • The bottom price of goods and services will be lower because the embedded costs of the current income tax system will no longer be a factor.
  • A national sales tax as this will be much more transparent than the current tax system. The people in America will be able to see the levels of taxation, and hopefully cut down on wasteful expenditure, corruption and inefficiency in government.

This all lined up may make the Fair Tax Act seems to be quite compact but before the American people decide that they should also explore some of the following arguments are made against the Fair Tax Act

  • If the tax is fully repealed as promised or future president or even Congress decides to change any part of the income tax code we could end up with a national sales tax and income tax, which would be catastrophic for economic freedom.
  • The national sales tax proposal is not indexed to inflation, which means that when inflation increases the base price of goods and services will also increase.
  • People who have paid into social security and private pension retirement accounts will effectively double taxed when they start to pull their money and spend it, because all the money that they have managed to save up has already been taxed at present tax system .
  • The retail price of new products and services will increase, and the first sight seems higher prices could decline impact on the economy.
  • Because tax rates will be below the national sales tax system, this could allow the government to raise the tax rate on certain items that it considers “unhealthy” or “hazardous”.
  • The “prebate” Fair Tax system could actually do a lot of damage over time, potentially causing people to rely heavily on the government.
  • If the Fair Tax will be very high, this could encourage more people to enter the black market to avoid the tax.
  • The Fair Tax does nothing to fix the main cause of high taxation, which is a separate government spending. Simply change the method of taxation is not going to change the roots of unfair taxes.

As you can see, there are two sides of a coin, which require careful consideration of the American people before we just allow the government to make all decisions. If mistakes are made in allowing this bill, it could very possibly be bad consequences in the future.

[ad_2]

Leave a Reply

Your email address will not be published. Required fields are marked *