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Financial Planning / Tax Strategies
|Subject: Re: FairTax||Date: 9/27/2012 8:06 PM|
|Author: ptheland||Number: 116700 of 122851|
but don't expect honest answers on this board since several of the biggies here are tax accountants (ptheland) and the Fair Tax would be an attack on their existence,
I am forced to take exception to that remark. I freely admit that I am a professional tax preparer. However, I have no fear of losing my job with the FairTax. Frankly, I could probably get a different job with minimal problems, or simply start a different business. I am not a one-trick pony. I choose to prepare taxes because, frankly, I enjoy it.
My objections to the FairTax are based on social equity. I believe that taxes should be paid by those that have the money to pay the taxes. The more money you have, the more taxes you should pay and the higher percentage of your income you should pay in tax.
Our current system is an attempt to tax in that way, but with some admitted flaws. However, those flaws are far fewer than the flaws in the FairTax. The FairTax is flawed at its core.
The FairTax would tax lower incomes at significantly higher rates than the much higher incomes because it taxes consumption rather than income. It does not tax savings. And the more income you have, the more you are able to save and the less tax you would pay as a percentage of your total income.
If you make $30k or $40k a year as a family today, you pretty much spend it all by necessity. The FairTax proposal would collect about 23% of that as taxes less a baseline spending allowance. From their web site, those two would net out to roughly zero. So the poorest in the country would end up close to where they are now. So far so good.
But let's say you make $100k and manage to save $10k. That leaves $90k for spending. Lop off 23% of that (about $20k) for the tax and you'd have $70k for spending. That's around at 20% tax rate on your total income. If you make $300k today and spend only $200k, you'd pay the 23% only on the $200k, or about 15% on your total income. And if you make $10 million and spend $5 million, that tax rate falls to 11.5%. That's a regressive tax.
And I don't like regressive taxes. I believe they are unfair.
Is that an honest enough answer for you?
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