Ulaven_Demorte
Non-Prophet Organization
- Joined
- Apr 16, 2006
- Posts
- 30,016
For those of you who think this is such a brilliant idea. I have yet to get a satisfactory answer to these questions among others:
How will this Fair tax affect housing development, that is, NEW houses being built that will cost ~23% more since only those houses will be subject to taxation under Fair tax. Why would someone not buy a home thats a few years old that is identical in features/size/location for say 15% less but still more expensive than prior to the Fair tax as a used home. it's a free market right. You can either pay the tax on a new house, or pay the owner of a used home that has upped his price to just under what you would pay for a new home. So housing prices go up and new construction goes down. If not, why not?
How do you prevent abuses of this system? Services by thier nature are MUCH more difficult to tax than are goods. Which is why most states only attempt to tax very few of them yet the fair tax attempts to tax ALL of them. Example: Every time you have to go to the doctor or hospital you would be hit with an additional 23% tax for services on your bill. This WILL lead to increased insurance premiums as the insurance companies pass along thier new tax to the consumer.
Every serious analysis has concluded that a Federal sales tax would have massive evasion. Taxing the spending of drug dealers and others not currently paying income taxes will not come close to compensating for the new evasion opportunities that will be created. Since it is not in the interest of either retailers or consumers to pay the tax, and because all of the revenue is collected at the point of final sale, it will be too easy for tax-free deals to be made with producers and wholesalers. Although evasion of state sales taxes is relatively small, that is only because the rates are low enough that it is not worth the trouble. However, where rates are high on things like tobacco, evasion is also high. A vast amount of foreign experience indicates that retail sales taxes cannot be collected much above 10 percent without breaking down.
Then there is a very severe problem of taxing business inputs under a sales tax. These must be exempt from tax in order to avoid cascading -- taxes being levied on taxes -- which creates serious economic distortions. To avoid this under the Fair tax, every business, no matter how small, would need some sort of exemption certificate, which would create unlimited opportunities for evasion, or they will have to be extensively audited in ways at least as onerous as under the income tax law.
Also, what about savings plans contributed to before implementation of the Fair tax? Moneys that have already been taxed once in the form of income tax. Are they not going to be subjected to taxes yet again when the money is spent?
How will this Fair tax affect housing development, that is, NEW houses being built that will cost ~23% more since only those houses will be subject to taxation under Fair tax. Why would someone not buy a home thats a few years old that is identical in features/size/location for say 15% less but still more expensive than prior to the Fair tax as a used home. it's a free market right. You can either pay the tax on a new house, or pay the owner of a used home that has upped his price to just under what you would pay for a new home. So housing prices go up and new construction goes down. If not, why not?
How do you prevent abuses of this system? Services by thier nature are MUCH more difficult to tax than are goods. Which is why most states only attempt to tax very few of them yet the fair tax attempts to tax ALL of them. Example: Every time you have to go to the doctor or hospital you would be hit with an additional 23% tax for services on your bill. This WILL lead to increased insurance premiums as the insurance companies pass along thier new tax to the consumer.
Every serious analysis has concluded that a Federal sales tax would have massive evasion. Taxing the spending of drug dealers and others not currently paying income taxes will not come close to compensating for the new evasion opportunities that will be created. Since it is not in the interest of either retailers or consumers to pay the tax, and because all of the revenue is collected at the point of final sale, it will be too easy for tax-free deals to be made with producers and wholesalers. Although evasion of state sales taxes is relatively small, that is only because the rates are low enough that it is not worth the trouble. However, where rates are high on things like tobacco, evasion is also high. A vast amount of foreign experience indicates that retail sales taxes cannot be collected much above 10 percent without breaking down.
Then there is a very severe problem of taxing business inputs under a sales tax. These must be exempt from tax in order to avoid cascading -- taxes being levied on taxes -- which creates serious economic distortions. To avoid this under the Fair tax, every business, no matter how small, would need some sort of exemption certificate, which would create unlimited opportunities for evasion, or they will have to be extensively audited in ways at least as onerous as under the income tax law.
Also, what about savings plans contributed to before implementation of the Fair tax? Moneys that have already been taxed once in the form of income tax. Are they not going to be subjected to taxes yet again when the money is spent?
