GeorgiaTex,
Three important points:
1) The system is revenue neutral, the tax rate will be whatever it needs to be. However, many of the so-called “independent analysis” do not examine the FairTax, they examine sales taxes in general. This completely misses the economic efficiencies tied to eliminating corporate & payroll tax and the surge in economic growth that we know for a fact would follow. The 23% inclusive/30% exclusive is a reasonable estimate for what the initial tax rate would need to be, and if our federal government could stop themselves from growing spending, this rate could actually go DOWN in following years.
2) The FairTax does NOT shift the burden to the middle class. The middle class will have the opportunity to choose to pay much less tax than they do now, and more importantly have the opportunity to SAVE money for investment, retirement, and college education TAX FREE. The FairTax allows the middle class to BUILD WEALTH which our current system punishes.
3) We currently tax INCOME, not wealth. I know this sounds like a no brainer but please stop a second and think about this. The truly wealthy in this country do not get W-2 income, they get most of their money through capital gains and dividends, which are taxed at a much lower rate. And because they don’t get a “paycheck” as we think of it, they don’t pay a single penny into the tax revenue-starved programs of social-security and medicare. To make matters even more extreme, they don’t have to pay tax on their capital gain until they “realize” it, in other words when they sell the asset. But they don’t need to sell their appreciating asset, they can borrow money against it instead and essentially live tax free. These are the miracles that can happen when you have a small army of tax accountants working for you. So while you think our current tax system really “sticks it to the rich” it does not. The truly wealthy make out like bandits under our current system. The people who really DO get screwed are those in the upper middle class or those in the middle class who live in areas with high costs of living. They might have a little bit bigger house than the average middle class person, maybe a slightly nicer car, but they largely face the same financial challenges that everyone in the middle class does. They have to go to work all day every day to pay their bills. Yet these are the people that get stuck with the “rich” label and pay out the nose while the truly wealthy avoid most of that burden. Under the FairTax this all changes, the truly wealthy pay tax on their extravagant lifestyle regardless of what their portfolio did that year, and finally they will be paying a fair share compared to the rest of us.
It’s easy for those of us who get a regular paycheck to equate wealth with adjusted gross income as it appears on our tax returns, but they are very different things, especially for the extremely wealthy. The FairTax finally brings these Americans into the fold, along with criminal tax dodgers which the rest of us have been paying for. Meanwhile, it gives a true opportunity for the middle class to start BUILDING WEALTH, which is the key to long-term prosperity.
Thanks for reading.
