First off, I never said this would do away with the IRS. What it would do is cut it by about 90% and do away with filing income taxes for about 90% of people. Plus it would eliminate all the headaches associated with different tax rates for different kinds of income (wages, rent, long term capital gains, social security, deductions, loopholes, etc).
The IRS would only have to look at forms filed by businesses in the US (say 3 million) as opposed to forms filed by almost every single citizen over 18 (say 200 million)
Second of all, you are assuming everything will be 30% more expensive than it is now. That is not true. Income taxes are already figured in to company's margins and expenses. If I'm selling a product and I want to make a $1000 profit and the taxes are 33%, I'm going to sell it for $1500 (assuming other costs are $0, which they aren't, buy I'm trying to keep this simple). Now, with a fair tax at 33% and I want to make a $1000 profit, I could sell it for $1000 (again assuming costs are $0) and the customer pays the 33% tax for a total of $1,333.
I don't trust Republicans either, but I do like this proposal. In fact Mike Gavel, former Democrat Senator for Alaska is for this.
|