The Fair Tax and its consequences.

Can you imagine life without the IRS?  No federal income tax, for example.  If you’re one of the shrinking bunch who actually works for a living, you would get to take home all the money you earn (except for state & local taxes; we wouldn’t have the payroll tax -- the bite for Medicare & Social Security.)   You wouldn’t have that complicated tax form to file.  You wouldn’t have to worry about deductions.

More benefits: the government would have one less huge weapon to use against its political opponents.   No more tax audits.  There would be no more need to classify organizations as profit or non-profit.  There would be no leftist ranting about how the rich need their taxes raised, or how “unfair” the tax code is.   The government wouldn’t have to know how much you earn, or what deductions you take.

People would be a great deal more honest – no need to cheat.  Even Congress would get more work done, because they wouldn’t have to keep modifying the tens of thousands of pages in the tax code.

Businesses would have much less regulation to worry about.

Of course, every silver cloud has a dark lining: there would be fewer lawyers, accountants, and tax services making a living by charging money to fill out your tax forms.  But I can live with that.

Here’s how: there are various versions, but this is the one which has been most seriously analyzed: (link): The Fair Tax.  It really is fair to tax spending, if necessities aren’t taxed.  Rich people spend much more than the truly poor, so they would pay the bulk of the taxes.  Here’s an intelligent analysis of it from 2008, when Mike Huckabee advocated it (he still does.) 

(link):Huckabee's fair tax plan is brilliant.

If it came into existence, the Fair Tax would seem tough at first, but the economy would adjust.  People would get used to it.

The alternative plan which many favor is the flat tax – which is still an income tax, but is much simpler.  That’s a different discussion.  I’m for that too, if it comes with a VAT tax, because I believe that taxing consumption (commonly known as spending) is the only fair way to tax.

There are cons as well as pros to the Fair Tax plan; here’s a (link):Analysis of the Fair Tax which lays out the pros and cons very well.

I personally don’t like some details of the plan.  I don’t like the idea of paying poor people a “prebate” to cover necessities.  The government should never pay people for anything.  It’s a license to steal.  The plan says, the sales tax would not apply to imports, goods used by businesses to produce other goods, or used goods.  I’m iffy about exempting business.  It should apply to imports, high-ticket used goods, and perhaps businesses should not have to pay it for their purchases.  I’ll discuss my reservations and the changes I’d make in the next post.

The IRS has become a weapon of the Obama administration, and is feared by its political opponents.  But even the left should like to see it eliminated, if nothing else because Republicans may win the White House some day, and what goes around, comes around.  When the Republican IRS goes into action, who knows what rocks they'll turn over when they investigate the heck out of Democrats?  Let's make government impartial again, or better yet, eliminate the IRS altogether.