Fair tax is a piece of proposed legislation that would do away with the Internal Revenue Service. In place of taxes paid at the end of the year would be a national sales tax paid whenever something is purchased. This may sound like a good idea, but take into account those who have a small amount of income to begin with. People who are on social security who barely have enough income to live would also be subject to this federal sales tax. This could cause people who are already struggling to get by, suddenly finding it impossible to do so. What about students who struggle to purchase textbooks required for classes, they too would be subject to the additional tax upon purchase.
The fair tax sounds good on paper, but it could very well create more problems than it resolves. While the new tax could initially generate more revenue, it could also attribute to slowed consumer spending. With our economy in the fragile state that it is in, would have the potential to worsen the recession. Our nation’s overall financial security would then rely on how much is purchased. This would mean if consumer confidence was low, less would be purchased and could put the government’s ability to operate in jeopardy. The question often raised is could fair tax work? The answer I would say is yes it could. The real issue lies in if fair tax was implemented, would the new sales tax make up for the taxes now collected from workers’ pay. Another area of concern would be if the money normally deducted from workers’ pay, would be enough to equal the tax being recovered through purchases.
The system currently in place by the Internal Revenue Service is by no means perfect. It does use a structure that takes into account the different taxes those with lower incomes are able to pay. A problem points to those with higher income paying a lower percentage of taxes for their income. This is where I believe the fair tax debate has stemmed from. The tax structure used currently can easily be viewed as flawed. I do think if properly modified though, it would have a better overall positive economic impact than a national sales tax.
The fair tax debate will continue to be discussed, with mixed opinions about how it would impact citizens and the economy. I do not think a national sales tax would be a clear answer to taxes being fair. One positive I can see from the fair tax proposal would be that those not subject to income taxes, would then be paying the tax for purchases. However I do not believe this would make up for those who cannot afford the tax, and would still be subject to it. The outcome of if fair tax becomes a reality has yet to be determined. I just hope it works out in the best interest of all the countries citizens as a whole.