The first thing that I consider is, "who is for this change in the method of taxation?" The answer that I come up with is conservative "think tanks" like the heitage.org and cato.org.
Why? Probably because the change is designed to shift the burder from the wealthiest to the less wealthy, as all recent tax "reform" seems to result in.
Here is one example of the result of this proposal:
The "rebate pie" for a single annual spender of $1,000,000 at
http://myfairtax.org/RebatePie.html displays a net tax paid of $227,935.
Single taxpayer, under the plan, pays the highest rate. Presumably a couple would pay less.
On the non-paritsan, "Citizens for Tax Justice" website (conservatives may see them as partisan because the theme is exposure of the injustice of the current tax "reform"), the following is displayed:
http://www.ctj.org/pdf/bushcheneytax2004.pdf In 2004, "President and Mrs. Bush reported $784,219 in total income on their tax return.They paid $207,307 in income tax,"
This amounts to just $20,628 less paid in taxes on nearly $800,000 in income, for a married couple, under the current tax structure, than a higher tax single would pay on $1,000,000 in annual spending activity under the "fair tax" plan.
The Bushes are currently paying about 26.5 percent income tax on all of their annual earnings. It can be presumed that they, or any other couple making their annual income do not spend all that they earn.
A single taxpayer (taxed presumably at a higher rate than the Bush's current rate, because they are a family of two), would only be taxed $227,935 on $1,000,000 in annual spending activity. This is a 22.7 tax rate, on the highest tax rate payer in this plan, and.....is only a tax on the spending of that individual, not on the income.
The above "real world" comparison, reveals to me why the Heritage and the Cato Foundations promote this "reform". It saves their contributors money, at the expense of the rest of us !
The comparison above also makes it easier to believe this:
Quote:
http://www.brookings.edu/views/artic...e/20040924.pdf
To determine the revenue- and budget-neutral tax rate in a national sales tax requires
estimating the rates of evasion, avoidance, the extent to which deductions, exemptions and credit
would be re-introduced, and the impact on economic growth. With extremely conservative
assumptions about the magnitude of evasion, avoidance, and statutory base erosion, it would
require a 60 percent tax-exclusive (38 percent tax-inclusive) tax rate to replace existing federal
taxes, and a 26 percent tax-exclusive (21 percent tax-inclusive) tax rate to replace the existing
personal income tax. These estimates do not include any allowance for economic growth, but even
if the economy grew by 5 percent, which would be an enormous effect relative to existing
estimates, the tax-exclusive tax rates would only come down to 57 percent and 19 percent to
replace all federal taxes, or the income tax, respectively.
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Simply put, people, the federal government is already running a $500 billlion annual deficit. Under this "reform" plan, most of us would pay a little less in taxes, and people who earn $784,000, or more......like the Bushes, woull pay signifigantly less, especially if, unlike most of us, they did not spend almost all of their annual income, under the new tax plan, each year. Where will the money that they currently pay in taxes, put won't pay any longer, come from to keep the deficit from rising even higher?