That is the essence of the Fair Tax. It taxes consumption instead of income. Another key aspect is supposed to be keeping a new tax plan “revenue neutral,” but to do that, for every dollar you lower taxes in one area you’ve got to raise taxes $1 in another.
Folks are cool with the lowering part. They will take to the streets against the raising part.
Imagine that.
Politicians in general and Republicans in particular have painted government into a revenue corner. They’ve made the word “tax” so evil, that they cannot raise taxes in one area $10 million even if it saves $20 million somewhere else. They cannot implement a “fair tax” because no American really believes that any tax is “fair.”
On the other hand, for all the talk about cutting spending, there is little enthusiasm for doing it. That’s why any “spending reduction” negotiated in Congress begins not immediately, but two, five, 10 years down the road. If a deal purports to trim the deficit by “$1.2 trillion over 10 years,” you can bet all of the savings — in the unlikely event they ever accrue — come in the last few years, because politicians know their constituents do not want to be burdened by cuts to their programs any more than they want to see their sales tax extended to satellite TV service.
It will be interesting to see just how hard the General Assembly tries to find tax reform this year. Sen. Frank Ginn expects some effort; Rep. Tommy Benton thinks not — but both agreed when I talked to them last week that the public outcry against increasing the sales tax makes it impossible to reduce the income tax.
The skepticism of the public is not without merit. Any tax plan that claims to be revenue-neutral will have some folks paying more and someone else paying less. Call me a cynic, but my money is on the people in the 47th Senate District and the 30th House District paying more in any new scheme.
Proponents of the Fair Tax like it because they believe it will result in them paying less in taxes. The problem they have is convincing the rest of us that we should pay more.
If we want inequity, why not stick with the current system? At least we know where we stand.
Mark Beardsley is the editor of The Commerce News. He lives in Commerce.
