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?
Fair Tax is far more 'progressive' than the current tax code and it spreads the burden of taxation out far more than the current system by taxing individuals who are able to avoid most, if not all, of the current tax burden either by sheltering their income via 'loopholes' and trusts or by operating partially or completely within the underground economy.
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?
Currently, we are subjected to a multitude of hidden taxes, multiple layers of taxation and tax schemes designed to obscure the amount of taxes we actually pay. The Fair Tax plan eliminates all of that and puts federal taxation right out in the open so that each and every one of us sees exactly the cost of the federal government, sees exactly how much is being siphoned off. The result will be that it will become far more difficult and politically costly to raise taxes than it will be to decrease spending.
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?
Nothing is exempted in the Fair Tax plan, all new items or services are taxed the same. Used items, including used houses, are not taxed. Neither internet access nor college tuition are exempt from the Fair tax because both are services.
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.?
That is the reason for no exemptions at all for whatever reason. Exempting anything, such as food for example, sets a precident that will lead to exactly what you have described. If you think about it, there is an exemption but it is based upon the poverty level rather than the nature of the service or commodity. All participants, no matter how poor or how wealthy, receive a monthly rebate of the tax up to the poverty level as defined by the Dept. of Health and Human services.
Contained within the Fair Tax plan is the repealing of the 16th amendment thereby making it impossible for the government to have both the Fair Tax and the income tax.
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.
This is a good question and there is a simple answer. If it has not been sold, it is new. The example of the 'demo' car operated by a dealership is a good one. The car has not been sold, therefore it is new regardless of the number of miles on the odometer. Of course, the high mileage on the odometer will make the car worth less however that has no effect upon the Fair Tax because it is a percentage of the sales price.
It is true that the Fair Tax plan allows people to avoid paying taxes to the federal government... to a certain extent. I have trouble accepting the negative spin that is put on this, though. How can increased freedom be portrayed as a negative? The Fair tax will result in a decrease in prices as businesses and corporations are freed of enormous tax burdens... burdens which are passed along to the consumer in the form of higher prices. Competition and economic realities will be the driving force behind lower prices just as it is now. This benefits everyone.
