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Sunday, Sep. 21, 2014

Our Opinion: Time for a Fair Tax

Monday, February 27, 2006

There is an organization that is promoting the idea of what it calls a "Fair Tax".

It is a tax on retail sales of goods and services that would replace federal income tax.

The change would have negative consequences on certain segments of the economy. Some law firms depend heavily on tax work and some businesses exist solely because of the existence of an income tax.

Although the elimination of the need for these services would be beneficial in the long run, there is no doubt that there would initially be negative consequences for certain businesses and individuals.

We believe the benefits would outweigh the negatives.

The present tax code is so massively complex that no one can understand it completely, including the hundreds of thousands of people, government employees and private sector professionals, whose sole or primary job involves dealing with tax law.

The tax is fraught with special interest loopholes and rules affecting business decisions that should more appropriately be based on operational efficiency and satisfying consumer demands.

Most states have a sales tax so the method to collect a federal sales tax is in place in most of the country.

A sales tax would be more regressive than income tax in that poor people would have to pay more taxes than they do now. Those proposing the Fair Tax advocate a rebate to poor families. This would require that some, but not all, of the present income tax bureaucracy remain in place.

A simpler, less bureaucratic way to make a federal sales tax less regressive would be to have it not apply to unprepared foods and other necessities on which poor people spend a high proportion of their income on.

The federal government should consider applying the Fair Tax on imports upon arrival in this country as well as when imported products are sold to consumers, even if trade agreements have to be scrapped to accomplish this.

The present system gives an unfair advantage to manufacturers outside of this country where there is no minimum wage, less stringent or no safety standards for workers nor effective environmental quality standards and no direct support for the functions of our federal government,

The import tax suggestion is a bit off the subject of a Fair Tax as proposed. Whether or not there is an import tax, the current unwieldy and unfair federal income tax should be eliminated.