Fair Tax, Flat Tax

I like the concept of a sales tax to replace income tax, as long as there isn't a stampede by wealthy congressmen to pass new legislation to create loopholes for their cronies in big business to avoid paying the same rates on their materials as the rest of us have to pay for our goods. The government would have to lean harder on us if it gave corporations new breaks, and that would not be a "fair" tax.

Even saying this, I just can't help suspecting that the code for such a federal tax, on sales rather than income, would be written so that business paid some "wholesale" sales tax rate on their goods while consumers are forced to pay a higher, "retail" sales tax rate.

A fair tax would have to be utterly fair, or the rioting would be near-instantaneous. A fair tax would be all too easy to ridicule and reject if it were exposed as not truly fair. And you can bet the media would dig fiercely to find any hidden breaks for the wealthy. There would be a predictable temptation, which would have to squashed, for manufacturers to pass along their supposed "increased cost of materials" to the consumers in a way that they didn't necessarily do when they were filling out tax forms. Of course, this tax would not be an increased cost of a material. It would simply be a repositioned way of paying the taxes due. If they used to have loopholes that the rest of us don't, then such a flat tax would be MORE fair.

One obvious advantage of collecting tax via goods and services is that a person could perhaps control his gross annual taxation -- by buying cheaper goods, or fewer consumables, during lean times, or when saving for something big. You'd get nearly your whole paycheck (for a change), and you'd control your tax cost depending on how much or how little you chose to spend or save.

Of course, the cost of goods WILL be significantly higher for all of us, with federal sales tax hung on every price tag, so if you buy the same as always your effective tax could be the same or even higher, I suspect (but without the 1040s, if that helps any). One assumes that even our utilities might be included in this type of tax. And insurance premiums and medical costs, etc. Everything could go up from rent to car payments and that sort of thing would not be adjustable. People with high medical bills, who get a deduction now, might find that they were taxed on all of it, if we aren't careful.

The income tax has seemed a real burden for years now, involuntarily taking way too much of a middle class person's income -- changing his economic status every April. With a "shrinking middle class" as we have now, fattening the average American's paycheck by 25% or more will seem like a great deal at first. I assume any such bill will be scrutinized to the last comma before passage, at the insistence of all of us.

Having said all this, I rush to add that it's too soon to make up one's mind on such a concept. I'm only able to discuss the most rudimentary possibilities here. We should see the details first, and chew on them a while to be sure we understand all the consequences.

We'll have to be satisfied that fair is really fair, and that the new system will be better for all Americans -- most particularly the majority which is the grass roots/middle class. This should not be passed over the average man's objections because some politicians think their version of the scheme is "the right thing" in spite of everybody else.