Kevin McCarthy Introduces “Fair Tax” Which Would Abolish Federal Income Tax
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This is the perfect plan. Yes, things will cost more.. but in the long run, the markets will adjust. What will really happen is that the ultra rich will now be paying a LOT more for their 'Toys' For example, buying a $10k eyeglass case will now put an additional $2,300 in the 'coffers' Dining out for the super wealthy will cost them more, but they won't even notice it since spending $500 on lunch is already no big deal to them. And on and on and on..
The only objection I have would be for regular groceries, like bread, milk, meat. They should have some essentials that would be exempt. Make it a 'Luxury Tax'. No matter what, it will be a boon for small businesses who get taxed to death at every turn. A small business comeback is what will save America.
Your concern over exemption for essentials is shared by many and is addressed in the plan. Instead of having a list of non taxed essentials which would likely be subject to political manipulation and would be difficult to administer, they developed what is referred to as a prebate. Under this provision every qualifying individual would be sent a monthly rebate equal to the tax on spending up to the national poverty level. For example, the poverty level for a family of four is $27,500. If the tax is set at 23%, that family of four would qualify for a yearly rebate of $6,325 and would receive a monthly check of $527 to cover the tax on essentials. In essence, they would have an exemption on $27,500 in yearly spending. The poverty rate for a single person is $12,880 and the rebate would be adjusted accordingly but would be for everyone qualifying regardless of income or net worth.
Everyone would be able to determine how much tax they would pay each year simply by adjusting their spending. A novel approach for supposedly free people.
So, if the IRS is abolished....who is going to administer and mail out those prebate checks? Sounds like more bloated bureaucracy and overhead that runs contrary to cutting spending.
It has been some time since I read the proposal but I seem to remember that the states were slated to collect the tax along with their current sales tax and the Social Security Administration would pay the prebate based on valid Social Security Numbers. When you consider elimination of the reporting and tracking of income by individuals, employers, financial institutions, charities, as well as government at all levels, you would very likely have less bureaucracy.
I doubt this has a chance of becoming law for the simple reason that the individual income tax is more for control of the population than raising revenue. Even if it resulted in me paying more, I would support it for the simple benefit of having privacy in and control of my own financial life.
Thank you for the additional info. I try to come from a point of logic, rather than paranoia. This is not the first time that a 'value added' or 'luxury tax' has been proposed. And who do you think are going to be the most adamantly against it?
Doesn't take a genius. Most don't know there was no income tax AT ALL, until 1913.
As to those most adamantly against it I would speculate that would be those who benefit most from the current system, including those who, for whatever reason pay very little or no tax.
"This is the perfect plan. Yes, things will cost more.. but in the long run, the markets will adjust."
Sorry, I don't share your rosy faith.
as is your right as a free citizen :)