The current Fair Tax legislation is tied, not merely to abolishing income taxes, but also to repealing the 16th amendment. Last I read about it, it would not go into effect, even if it passed, until Congress lost all ability to levy income tax at all.
And FairTax has a pretty narrow conception of what constitutes consumption. Certainly not stocks, as you suggest. Investments in general are excluded. And any used items--used homes in your example--are excluded.
This may be true, but how sure are you that the proponents of the FairTax will keep control of the process to ensure that outcome?
The income tax gives politicians tremendous power over the entire above ground economy and almost all the population, why would they give that up?
Since when have tax reforms in the West resulted in a wholesale replacement of one type of tax by another, instead of a layering? If you could point to a few exceptions I'd be interested.
It's not a question of history, but of the way the bill is written. In stark contrast to the law that is the topic of this thread, the bill has been online to view for years, and even has a summary in plain english: http://www.fairtax.org/PDF/PlainEnglishSummary_TheFairTaxAct...
How do I know the income tax will really be gone? Section I of the bill abolishes all income, estate, payroll and gift taxes, repealing sections A, B, and C of the Internal Revenue Code in their entirety. Sec 301 disbands and defunds the IRS, and requires that all its records be destroyed in a year. And sec 401 contains a sunset clause that negates the whole thing (both the sales tax and the abolishment of the income tax) if the 16th amendment to the constitution is not repealed within seven years. Thereafter, any attempt by congress to bring back an income tax would be, not merely unpopular, but actually unconstitutional. And they'd have to build up the infrastructure from scratch.
Whether or not you think the Fair Tax is a good idea (and obviously I do), it's a model for how law ought to be made. In public, with a lot of visibility and discussion up front, a lot of time for question and answer, the full technical details exposed. The bill is not a tangled mess of amendments, but a well thought out and cohesive whole.
Ummm, what magic set of legislative rules would allow this bill to get a single up or down, no amendments, vote?
There's also the inconvenient fact that no Congress can tie the hands of a future Congress.
The only way to accomplish this in our system would be to get a single amendment to the Constitution that would simultaneously repeal the 16th Amendment and replace it with the FairTax, and then get 3/4ths of the states to ratify it.
It does apply to new houses, but you can't consider the sales tax in isolation. It's offset by the fact that you get to keep your entire income. Not just the portion on the pay stub, either; your employer would no longer owe payroll taxes. In general, you would get some or all of those, too.
Financing a 30% more expensive house and paying for it out of a 30% bigger paycheck would be somewhere between neutral and a win for most people.
It makes a silly imbalance between new and old properties. The immediate second you buy that new house, it's price drops in value 30%. So you have little incentive to buy new as you can get 30% more house for buying slightly used.
Doesn't seem to stop people from buying new cars. ;)
Nah, the sale of a used house is a totally private transaction. It's not as though there's a magical base price for a house of that size, and then a tax. It'll be sold for whatever the seller can get for it. If it's practically new, it might be the original price including the tax. Heck, it might be higher.
The original builder doesn't get to keep as much of the retail price as a subsequent private owner would. That's the distinction between new and used.
Nor is it as though buying a fixer-upper avoids the tax entirely. Materials and labor for renovations are taxed. That can be a significant portion of what's put into a home.
The current Fair Tax legislation is tied, not merely to abolishing income taxes, but also to repealing the 16th amendment. Last I read about it, it would not go into effect, even if it passed, until Congress lost all ability to levy income tax at all.
And FairTax has a pretty narrow conception of what constitutes consumption. Certainly not stocks, as you suggest. Investments in general are excluded. And any used items--used homes in your example--are excluded.
http://www.fairtax.org/site/PageServer?pagename=about_basics...