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Reply #6: No, that doesn't work. It wouldn't tax income, only those things that [View All]

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Home » Discuss » Archives » General Discussion: Presidential (Through Nov 2009) Donate to DU
SharonAnn Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-29-05 11:04 AM
Response to Reply #3
6. No, that doesn't work. It wouldn't tax income, only those things that
Edited on Thu Dec-29-05 11:05 AM by SharonAnn
are subject to sales tax.

A fair tax system taxes wealth, income, and consumption. It attempts to strike a balance so that behavior is not determined only by the tax consequences, but rather by situation a person/corporation is in and the benefit it derives from society.

If sales tax was the only tax, the wealthy would buy very little that was subject to sales tax. They would get many purchases defined as "Tax-free". For example, they might lobby for the purchase of yachts to be tax-free because of all the jobs provided in building the yachts. Corporations would want yachts to be tax-free because they're a "business expense". So, a small business person would pay tax on a pickup truck but others would pay no taxes on yachts.

Or, there's the solution of buying things in an area where there is no sales tax. Set up a legal entity in a free port and purchase things through that, pay no tax, and you still can buy what you want. Of course, only the wealthy and corporations could afford to do this.

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