Quote:
Originally Posted by Kickaha
It's actually beautifully simple.
What's the primary way that our income tax is progressive, giving the biggest benefit to the lowest segment? It's not the rate, it's the income point at which your tax is zero, without any deductions. Say that level is $14,000, based on your number of dependents on your W-2. The current system is designed to keep that amount free of any taxes, to ensure you have that amount, at a bare minimum, right?
You can do the same with a tax rebate on sales tax. You file the W-2 (and that's *it* - no 1040 crap), and the amount of tax you would have paid is computed as (your base * the rate). That's the amount you get paid back, since you can't *not* pay it at point of sale. Now here's the nice part. This amount is known *as soon as you file that W-2*, which means you can be paid that amount *before* you pay it out of pocket. You can even ask for a monthly check to supplement your income on an ongoing basis.
Now as for the rate - who do you think is going to pay more... someone who spends $25,000 a year, or someone who spends $250,000 a year? Do you *really* think that someone who is making seven figures is going to spend as little as someone making 1/20 that?
It hits crass consumerism the hardest, it leaves those who save more or less intact. This is a nice thing.
Seriously, it would be best if you went to http://www.fairtax.org/site/PageServ...ame=about_main and read about this directly - they do a much better job of explaining it. It will require you to leave your preconceptions at the door, however. It's a stunningly novel piece of rethinking the issues involved. Once explained, I have met few conservatives or liberals who have had a serious problem with it. |
So... this tax is only progressive if you are under the poverty line, otherwise it's highly regressive? Seriously, like others have said, it's the percent of your income that you actually spend. The more you make, the less, as a percentage, you spend and the less that you pay as a percent in taxes. Regressive.
Reading the WSJ, a little over 1,000 people in the 90%+ income avoid taxes entirely.
Then there's the idea that saving money is actually bad for the economy and really, only the wealthy save a significant amount of their income.