Rep. Buddy Carter [GA] has filed HR 25 – Fair Tax Act. I’ve been looking it over.
Basically, it repeals all federal personal and corporate income taxes, and replaces it with a national sales tax. If it somehow passed as-is (which it won’t, see below), it would — in theory — be an improvement over the current system. You’d keep more of your money.
L. Neil Smith once calculated that seven-eighths of the price of a loaf of bread is actually taxes: cumulative taxes along every stage of production; farming wheat, selling to milling companies that turn it into flour, selling to bakeries that turn it into bread, selling it to distributors that in turn sell it to stores. And finally the sales tax the consumer pays.
HR 25 gets rid of that cumulative taxing. In theory, companies should adjust their prices down to compensate for the taxes once built into the price, that they’d no longer be paying. You’d still be paying a 23% sales tax on a new lower price, but that beats paying 87.5%. The problem I see is that few companies would adjust their prices accordingly; they’d view it as just an improvement to their profit margin.
Or, perhaps, some genius could convince companies that dropping prices would be a great PR move. Doubtful.
But I can’t see this passing. It would be tough in the barely Republican House, and impossible in the Dimwit controlled Senate. It takes away the Dims’ power to social engineer corporations through taxation. Worse, from the spendthrift Dim perspective, it caps federal revenue at just 14.91% (plus some other stuff).
Worst for the Dims: It eliminates the IRS, one of their favorite Lois Lerner style cudgels with which to threaten and damage political opponents.
It won’t pass now, anymore than did the previous attempts. Nice try, Buddy.
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