Wednesday, August 12, 2009

Fair Tax vs. Flat Tax

The main problem I have with the Fair Tax (National Sales Tax) is I am afraid we will end up with both an Income Tax and the Fair Tax. The income tax was first introduced during the Civil War as a temporary measure to fund the war and was imposed on the top one percent of the population. This flat rate income tax was repealed in 1872. However Congress passed the Income Tax Act of 1894 and it was to be imposed on the wealthiest members of the population. Over time the tax laws have changed wherein more individuals have been required to pay the income tax with the maximum rate at one time up to 94%; and the tax code has grown to over 67000 pages.

The Fair Tax is based on the consumption of new goods and services. What is to prevent the retailer from increasing the cost of the product, or the government through regulation causing the costs to rise, which would increase the amount of tax, possibly making the product unaffordable?

How would it be policed around the Border States? What about Internet purchases or overseas purchases? With inflation looming on the horizon because of the government and this administration basically printing money, the cost of goods and services will rise.

I am for simplifying the tax code but I think the Fair Tax is the wrong way to go. With a tax on consumption the individual has no control over it except not to buy it, but if the person needs the item they would have to purchase it at whatever the cost plus the added tax. Wherein a flat tax is based on a percentage of the individual’s income and they have some control over how much they make. I believe everyone who lives in this Great Country benefits from what it has to offer and they should contribute to the support and defense of it.

Greg Zotta

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