You mean aside from the horrible inflation and collapse of domestic markets? Did I miss your solution to that problem?
Inflation? Hard to say. Everyones got more cash, and interest rates are low, adds to inflation. Economy more efficient (less tax compliance costs), more productivity out of workers (no disincentive to work more hours, second job, etc.), subtracts from inflation. Most importantly, foreign investment in US, and increase of exports from US, definitely subtracts from inflation.
Why do you keep saying domestic markets would crash? Any imported good pays our (US) sales tax, any exported good doesn't pay our (US) sales tax. Any imported good comes to our shores with the hidden taxes of the country of origin. Therefore....I buy a Ford, I pay MSRP (no hidden taxes anymore, 20%+ cheaper) plus Sales tax (30%). I buy a Volkswagen, I pay MSRP (including the income and payroll taxes of the German or Mexican workers) plus Sales tax (30%). It makes everything relatively cheaper to buy American, good for domestic markets. Prices go up a little, or don't change at all, depending on who you listen to. More cash in your pocket, how is that bad for Domestic Markets? (at least US domestic markets, Canadian Domestic Markets have to fend for themselves).
No corporate tax, no corporate income tax, no tax on business expenses? Except for the few, very low profit margin things that benefit from really cheap labor, everything would be made here. Those Nikes from Indonesia? They come over cheap, it's the Advertising and Endorsements that cost money....and that's done on Madison Ave, NYC....good for our economy.
The black market? no, i don't expect the drug dealers and prostitutes to collect sales tax on their illegal transactions. I do expect them to pay sales tax when they buy their cars, rent their apartments, go to the grocery store, etc. Right now, we never get any of their money.
E-commerce: sales taxes would be assessed for goods and services bought for consumption by people in the US. I didn't see anywhere that goods and services sold over the internet would be exempted.
There is no more simple, efficient, and effective tax plan out there. Smarter men than I have calculated it to collect the same amount per year, to be easier to collect, and much easier to understand.
Please explain your reasons for believing this act would cause rampant inflation and collapse of domestic markets. You did once before, but I don't believe you'd read the FAQ or anything else associated with http:www.fairtax.org
You do realize that to make that calculation would require an ANNUAL census, do you not? That's quite the undertaking.
We already require annual tax returns. An actual census would not be required. Those who did not want to be counted could feel free to not recieve their monthly prebate.
That's a HUGE amount of revenue you are kissing goodbye. Which chunk of government are you proposing we collapse?
The tax, as proposed, is revenue neutral, it raises as much as our current tax scheme. The IRS would eventually be eliminated.
I didn't catch anything that projected revenues in comparison to the current system.
From fairtax.org FAQ #6
Does the FairTax rate need to be much higher to be revenue neutral? The proper tax rate has been carefully worked out; 23 percent does the job of: (1) raising the same amount of federal funds as are raised by the current system, (2) paying the universal rebate, and (3) paying the collection fees to retailers and state governments. Unlike some other proposals, this rate has been independently confirmed by several different, non-partisan institutions across the country. Detailed calculations are available from FairTax.org.
If there is a financial shortfall, how would you deal with it?
Same way we do now, deficit spending. Note however, that national consumption is more stable than national production.
What this plan suggests is that instead of taxing people, we just shift the burden on to the consumer entirely. A 23% consumer tax on goods would cripple (as far as I can imagine) any foreign export markets. I am curious though how you would go about protecting imports as well under such a plan.
The burden is currently on the consumer, it's just not obvious, they are "hidden". A company that pays taxes, pays taxes out of the revenues it made from the consumer, and the wages it didn't pay workers. Exported goods are NOT taxed, not even with the aforementioned hidden taxes, giving a very serious competitive edge to US products abroad. Imported goods ARE taxed, paying for the US government, PLUS whatever hidden taxes from their country of origin, placing them at a disatvantage to domestic goods.
if foreign companies transfer production to American locations to enjoy these new tax 'breaks', what chance does the domestic market have, when it loses "price" as it's only advantage?
They now become the domestic market...Millons of dollars spent on building infrastructure here, and millions of jobs added to our economy. Competition will keep their profit margin from being too large, and that's usually going to the US stock market anyway.
A side-effect of a "Fair Tax" proposal would undoubtedly be a reduction in import costs for multinational corporations. The only way then to guarantee that those corporations would in fact lose their advantageous tax situation would be to impose trade barriers and artificial price controls.
If they are imported to the US for business purposes, they only pay the hidden taxes of the country of origin. Once they pass to the consumer, they pay the sales tax. Goods from other countries pay hidden tax of other country, plus domestic (US) sales tax. Goods manufactured here pay only domestic sales tax...giving us a 20+% price advantage...it won't make up for ultra-cheap unskilled labor, but gives us an advantage for the better paying jobs required to make a more complex product.
UltimateJoe, thank you for providing an actual debate, not much point in having one when everyone agrees.