Is The Fair Tax Closer To Becoming A Reality?

Surprisingly, the Washington Post reports about an ad buy made by a Fair Tax advocate group.

The timing couldn't be better considering the IRS scandal still unfolding in Washington. As the group's ad states, this is “our best chance ever to shutter the IRS...”

For those not familiar with the Fair Tax, it is a national sales tax that will replace both the federal income tax and FICA, the idea being that it will be revenue neutral. The tax will be applied to the purchase of new goods and services for personal consumption at the final point of purchase. (That means it is assessed only when the good or service reaches the consumer and not along the way like a Value Added Tax.) It won't apply to used goods.

The argument made by those opposed to the tax state that it would unfairly burden the poor and give the rich a break, but this argument shows that they don't understand the scope of the tax and how it will be implemented. One of the features of the tax is what is called a prebate, system that removes the burden of the Fair Tax from the poor.

Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR25/S122) provides a monthly universal prebate to ensure that each family unit can consume tax free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application. There is no marriage penalty as the couple gets twice the amount that a single adult receives.

Reading the comments to the WaPo article it is evident that many haven't figured out that the Fair Tax includes no loopholes and that the wealthy will pay far more than everyone else. After all, they buy more than everyone else. But these folks still seem to think the rich need to pay even more, something that has been programmed into them over their lifetimes. They either will not or cannot understand the realities of the Fair Tax because it's too simple for them. They assume there will be loopholes that will let the wealthy avoid paying the tax, not understanding that the wealthy already have loopholes that help them minimize what they have to pay.

Another argument is that the wealthy will be paying the same taxes as a janitor, but I think they're confusing tax rate with taxes paid. Why should anyone have to pay a higher tax rate than someone else? The argument is that it wouldn't be 'progressive' (something I has always interpreted as 'regressive'). It must all boil down to the belief that the wealthy should pay every penny they make to the government because, after all, they stole it from the poor, the so-called Zero Sum Theory of wealth. (But not one of our Progressive brethren has been able to explain to me how one steals from the poor. The just know that if someone became wealthy it was because someone else had to become poor. Do I really need to go into the fallacy of that belief?)

What chance does the Fair Tax have of becoming reality? To be honest I have to say it's slim. But it does have a better chance than it did before the IRS scandal broke into the public view.