Thursday, May 5, 2011

The FairTax

New feature...I'm dedicating the next few months of my blog, a desperately needed return to writing, to the FairTax. Herein, I'll explain components of the FairTax, and what I hope are easy to understand examples of the implications it would have on the microeconomic level (you, me, families, and individual businesses within the United States), as well as the macroeconomic level (business and government interaction as well as global economic interaction).

So, what is the FairTax?

First, ignore the name. It's a philosophical argument, and one I'll address later. My definition of fair may be different than yours, depending on what we're talking about. That's not superfluous, by the way, nor unimportant.

1) FairTax is a national sales tax on new goods and services.
2) It would replace all forms of income taxes, corporate taxes, and payroll taxes.
3) It includes a "prebate," a monthly stipend to offset the estimated taxes spent on necessities such as food and medicine, up to the Federally-defined poverty level, based on family size.

Comments and questions are welcome, and encouraged. That said, be specific about your misgivings and criticisms. Additionally, bear in mind that the FairTax bill is about 200 pages long, and really only because of the format necessitated by legal language: it's really very simple. By contrast, our tax code is nearly 17,000 pages long, not including ancillary regulations on goods, services, and economic sectors. Finally, economics is a big subject, so crafting responses requires specificity, not blanket statements such as, "It sucks," or, "Everybody will be screwed!" Why do you think it sucks, and how so will everyone (and just who IS everyone?) be screwed?

Lastly, the title links to the Senate Version of the bill, via the awesome