I was reading the piece about the Fairtax plan, and noticed that while the author included the hypothesis that citizen spending overseas would increase, he did not include that foreign spending in America would also increase... actually explode probably, as foreign citizens and businesses would be exempt from paying the tax, there would be effectively zero taxation on their purchases- that combined with the associated productivity increases should compel LOTS of foreigners to buy american products and services. Also, I see no reason why it wouldnt be the LAW for americans to report and purchases that they make abroad and send in the taxes. For example, under current law, if you live the plurality of the year in america, you have to pay taxes on all your income, regardless of whether its located in America of the Caymans. Also, most states sales tax laws state that you have to send in sales tax on things you buy online from other states, even if the stores in other states are not responsible for sending the money in for you. The same type of law (but hopefully enforced) could be applied to fairtax, eliminating the incentive that Americans would have in buying foreign goods for the tax discount.
Be Sure to Continue to Page 5 of Even More Letters on the FairTax
