That's not my point, or at least not my entire one. I admit we're covering a lot of ground here. But as far as the poor go, you have to remember two things:
8. One of the biggest arguments for the FairTax is that prices will somehow become a great deal lower when income taxes are removed from the United States. I don't see how that's going to happen at all. I understand the argument: if an employee makes $45,000 in income, he might only get to take home $30,000. If income taxes are removed, the company can just pay him $30,000, the employee is now just as well off, but the company has saved $15,000 in costs that they can pass along to the consumers. But how realistic is it to expect people to take a pay cut when they have to pay a 35% tax-exclusive rate tax on purchases?
Secondly, given the experiences in Japan, I don't see how a proposal which would cause deflation is particularly desirable.
Please cite your sources for the cause of deflation with the passage of the FairTax?
I'm not the one saying that prices are going to drop 12% or 18% or 314% like many FairTax advocates are. I don't think that's going to happen at all.
What I am saying, even if those claims are true, would a general drop in the level of prices even be desirable? Deflation occurs when prices are declining over time. So any study which says that the prices of goods will drop is implying that there will be deflation, even if they're not using the "D" word.
Best regards, One of 7 million taxpayers who've had enough
I would like to thank you for your very kind, very thoughtful, and very thorough letter. I'm glad people are learning about the issues and seeing what they can do to help.
In the long run, if we really want to pay less taxes, there's only way to do it: Make sure the government spends less money and ensure that the money it does collect it spends wisely. Controlling spending is the only sure fire way of making sure that you pay less taxes.
Final thought: The income tax was originally 3% and only applied to a small segment of the population. Look where it is today. If we enact the FairTax today, what will rates be in a few generations?
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