Before I begin on this subject, I suggest that any first time reader spend a few minutes reading the previous entries. It might give you a better perspective on what follows.
With that said, I want to focus your attention to one of the big criticisms which you will hear over and over again about of the Fair Tax Plan (FTP) even though it is a false claim. That is, that it is a regressive tax and will have a negative impact on the poor while freeing up enormous amounts of money for the rich.
To put this in context let me point out that most of our taxes, except the income tax, are regressive in nature. To give a few examples:
If Donald Trump or Bill Gates buys a pack of cigarettes, he pays exactly the same tax as the part timer at Wendys. If either buys the same model new car as the plumber, he pays exactly the same State sales tax as the plumber. The same is true of the taxes on gasoline and other products as well. All of these taxes are regressive.
And don't forget the worst one of all--the Social Security Tax. Currently, it takes 6.2% of your salary up to $97,500 This means that the clerk making $20,000 a year has 6.2% withheld from his salary even before he gets it. While another, making $250,000 would only forfeit 2.4% of his salary. Now that is really regressive.
All of these taxes takes a larger proportion of the lower paid indiviual's income than it does of the richer.
You never hear much about this regressive taxation. Only when we talk about the Federal Income Tax do we hear over and over that it MUST be progressive or it is unfair to the lower income wage earner. This is emotional and also hypocritical as the above examples show.
At this point I want to put on the board an obvious fact. Taxation should be about raising revenue to run the country. That should be its ONLY purpose. We should not corrupt this very simple fact by introducing either "social engineering" or favoritism into the mechanism. These two forces are what has corrupted our existing system. The Fair Tax Plan corrects the problem by treating each taxpayer exactly the same, i.e. you pay a tax when you buy something.
For those taxpayers who might have forgotten, the Constitution had to be amended (Number 16) to allow the Federal Income Tax to become law. Before that such as a scheme was UNCONSTITUTIONAL. That, i.e. change the Constitution, was a pretty slick political move.
Before anyone becomes unglued, I have not suggested taking compassion and social welfare out of our way of life. But it should be done in the open and directly, not as a subterfuge of revenue raising.
I have one other opinion which might sound revolutionary and that is that EVERYONE who lives in or visits this great country and enjoys the blessings that accrue should share in the burden of running this country. There are large segments (criminal elements, tourists, etc) who contribute nothing to Federal tax revenue at all under our present system because our current system is based on income.
That is enough for now. I promise that I will get to the specifics of the Fair Tax Plan next.
N.B. This is just a little item to make you think. The three major car companies in the US will lose $15 Billion this year. Since income tax is based on profit they will pay nothing this year and in many subsequent years due to carryovers. Think about this on April 15th. Under the Fair Tax Plan they would have had to pay taxes on everything (goods and services) which they purchased.