"The FairTax will replace the Internal Revenue Code with a consumption tax, like the taxes on retail sales forty-five states and the
have now. All of us will get a monthly rebate that will reimburse us for taxes on purchases up to the poverty line, so that we're not taxed on necessities. That means people below the poverty line won't be taxed at all. We'll be taxed on what we decide to buy, not what we happen to earn. We won't be taxed on what we choose to save or the interest those savings earn. The tax will apply only to new goods, so we can reduce our taxes further by buying a used car or computer . . . " District of Columbia
The fair tax or consumption tax has a lot of benefits in that it lowers administrative costs and allows the market to operate more efficiently (lowers deadweight loss). Also, it lowers the cost of the consumer doing their own taxes. Those are the direct benefits, down the line there are many other advantages for the
One issue with the fair tax is that it would put an awful lot of people in the area of accounting out of a job, but that is only a short run view. Folks with marketable skills will still be able to find a job in industries that become larger because of the money saved.
Hearing so many Christians concerned about capitalism and how it hurts the poor and has caused the separation of the rich and poor really led me to write this post because the heart of the matter struck me about the fair tax and conspicuous consumption. It seems like some people think that capitalism is evil. But, I liken it to money. Money like capitalism is not evil in and of itself; the love of money or conspicuous consumption is a moral issue. We have to ask ourselves: