UnFairTax

So, apparently, some people at Purdue think the school newspaper, the Exponent, is just too damned liberal. So, they have their own paper, the Purdue Review. I happened to see some lying around, so I picked one up for a lark. Here's what was on the cover to give an idea of how "fair and balanced" they are.

Amidst the hilarity is an article about the "FairTax" and how wonderful it is. The idea of the FairTax is that it replaces federal income tax with federal sales tax. Apparently, this will fill the world with sunshine and roses, because sales taxes are perfect and wonderful and income taxes are mean and evil. ... Or something. According to the article, the FairTax will make taxes more simple, more transparent, be economically stimulating, and even be more progressive.

I'll admit that the FairTax as proposed is much simpler than the current tax code. But I see no reason it would stay that way. If it were to be accepted into law, it wouldn't be long before changes were made to it. Things would be added, exemptions would be included, etc. And I would say, rightly so. There's a reason the tax code is so complicated. The world is complicated, and there are a lot of ways that money can be spent, paid and otherwise exchanged. I would hope our tax code would consider those things instead of simply ignoring them.

They don't really justify how the FairTax will be more transparent, besides implying that people know how much they spend better than the size of their paycheck before taxes are taken out. That's true, but the FairTax plan obfuscates how much of what you're paying is going to the government. They deliberately use an inclusive tax system. An exclusive tax system is transparent; when you buy a $1.00 dollar candy bar, you know how much tax there is, because you pay $1.30. But with an inclusive tax system, it's not so obvious. You pay $1.00, but 23 cents go to the government, and the store gets 77.

It'll be economically stimulating, because it will take in the same amount of tax revenue as the current system, but leave citizens with more money left. Yes, you read that right. It will manage this amazing feat by taxing foreign visitors, illegal immigrants and drug lords. Um, yeah. I'm sure those people are spending just that much money.

And this is the best part. A sales tax will be more progressive. Sales taxes are regressive, practically by definition. People with less money have to spend a greater percentage of their money on necessities. There's really no way around that. Now, it does talk about a monthly rebate, that everyone would get money equal to the tax rate times the monthly poverty rate. Which makes it less regressive, sure, but it's still a sales tax, and there's really no way around that. Oh wait, no, "for reasons too technical to explain here, sales taxes are neither progressive nor regressive". Oh, now it all makes sense.