1. If the FairTax plan is revenue neutral and many Americans will pay less tax and corporations will pay almost no tax, who will wind up paying more and how much more?
Corporations and government create no wealth on their own. It is the people that creat wealth and it is people that are taxed. The difference in the Fair Tax is that people will be paying the tax directly and it will not be hidden. Also, since it is so much more efficient, people will stop wasting their time thinking about how to play the tax game. Therefore, people will be more productive and spend less time and money on paying taxes. People will pay less taxes because of efficiency. Also, the tax is voluntary since you don't have to buy that new car, etc. Used stuff is not taxed.
2. If the FairTax is really such a less destructive way to collect taxes, then doesn't that give the Federal government even more of an incentive to raise taxes under a FairTax system, knowing that it is not nearly as destructive as under the current system? Efficiency is a terrific thing, but might it have a downside? Is giving the U.S. government more efficient ways to collect taxes a good thing if you believe taxes should be lower?
It is easier for government to raise income taxes because it is hidden. Most people don't know how much they pay. They may know how much is refunded.
3. What, if anything, is exempt in the FairTax plan? Does the FairTax make a distinction between a new house and a house with a previous owner? I've read that internet access and tuition would be exempt from the FairTax? Why are they exempt? What guarantee do Americans have that it would stop there?
Only new, retail is taxed. Services are taxed but there is a hidden, inbedded tax on sevices now. Tuition is exempt to encourage education - thinking the increased productivity would overcome lost revenue in the long run. I think internet access is exempt by law for state income tax now but not sure. I think this is spelled out in the Bill but there are no guarantees with any government plan.
4. What guarantee is there that the FairTax will not end up with as many exemptions and loopholes as the income tax? I'm from a country where the amount of federal sales tax you're required to pay differs depending on if you want to purchase a single donut or you want to purchase a dozen donuts. Why couldn't that happen in the U.S.? There are no guarantees but we need to get rid of the 6000 pages of IRS code. I wish we would actually follow the US Constitution but that is a real stretch!
5. Used goods are exempt from the FairTax and so are goods and services used by business. What exactly is considered a used good for taxation purposes and who pays the tax? It's not as clear as you might imagine - take for example a dealer "demo" car with 5000 miles on it. It's clearly a used car, but the dealership does not pay taxes on it, since it's a business. It seems to me that consumers could avoid paying high taxes by buying "slightly used" goods and businesses could find a way to offer them to the public.
Again, the states already deal with tax-exempt status for businesses. If you can buy a computer new for $5000 and sell it on EBAY used for $5500, more power to you. It is not a bad deal for the government because you will go out an spend the $500 on an IPOD, paying the 23% tax on the $500. It works all the way around.
What measures would be put in place to prevent such a system? There's nothing fraudulent here. Would you put into place a law saying that businesses can't sell used business items? Would you require a distinction between used items sold by consumers and used items sold by businesses? It's not clear what the answer is here, but it calls for a lot more complexity than I've seen in any FairTax proposal.
I don't think we sould worry about the government getting enough money. They have way too much now. Love of money is the root of all evil and complexity is just the government's way of getting hiding the fact they are evil.
