Why the FairTax Might Actually Happen

Strangely the most common complaint I hear about the FairTax is that it is a fantasy. I am told there are too many powerful interests for keeping the status quo. Well, that may change in the next few months, and very quickly I might add.

Two reasons for this are that some Democrats are actually pushing ideas that will remove any ability to distort the FairTax in the future. One example is the consideration of imposing a Value Added Tax, and the other is Barack Obama’s limiting of charitable deductions. Here is why this will make a major difference:

Many people who have never heard of the FairTax confuse it with a typical sales tax, which it is not, or a VAT, which it isn’t either. The value added tax is a hidden tax at all stages of production. The VAT simply makes all goods more expensive without anyone knowing why when they purchase goods.

Conversely, the FairTax, after removing all federal taxes, replaces them with a single transparent and open 23% tax (for those of you who have heard the argument that it is really 30%, no it is 23%). The FairTax prebate at the beginning of each month also ensures that the poor are not going to be taxed on the basic necessities of life.

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Now, however, some Democrats are proposing the VAT, which will make this the perfect time for the FairTax and the VAT to be publicly debated. The more talk about the VAT, the more clarification there will be that the FairTax is different and better. When some politician in the future supports the FairTax, he or she will no longer have to distinguish between the two taxes.

The second famous attack against the FairTax is that charities will suffer without a charitable deduction. The fact of the matter is that the greatest correlation that leads to charitable giving is take home income. If you have more money to spend, you will also give more. Since people get to keep 100% of their paychecks under the FairTax, charities will not suffer.

Well, now that Barack Obama has decided to limit charitable deductions. People proposing the FairTax in the future will simply be able to point to Obama’s current tax plan as a means to judge what will happen. This isn’t to say that I don’t support charitable deductions; I do. But, if not having the deductions means we can get rid of the current tax system in favor of the FairTax, I am in full support.

So, with these two issues coming to the forefront, and the fact that the cosponsors of H.R. 25 are increasing, the FairTax might actually happen.

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