Retailers will be more profitable – a zero corporate tax rate and no taxes on dividends or capital gains for their shareholders. This means more money to invest. Compliance costs will be lower by appx. $225 billion. Retailers will also receive a collection fee for collecting and sending the sales taxes to the government.
The economy will grow, more people will have jobs, incomes will increase more rapidly, which means people will have more money to invest and to buy goods and services. Consumer interest rates will fall between 25-30%, which means consumers ability to finance goods and services will increase.
Consumption is taxed once under both an income tax and a sales tax. Under the current tax system, consumption purchases are made from after-tax dollars. Under the FairTax, consumption purchases are made from after-tax dollars. The difference is not the way they impact consumption, but rather how they impact savings. The present income tax double or triple taxes savings, while the sales tax does not tax savings until consumed.
Retailers’ Compliance costs will be lower. There will be one sales tax on all goods and services, so the retailer simply needs to calculate its total retail sales on a monthly basis:
No more uniform inventory capitalization requirements.
No more complex rules governing employee benefits and retirement plans.
No more tax depreciation schedules.
No more tax rules governing mergers and acquisitions.
No more international tax provisions.
Sorry to spend so much time on businesses and their compliance rules, but whether you know it or not, or whether you like it or not, business is very important in the life of a consumer (you and I). All our goods and services come from some type of business and the easier they can make it for businesses, the lower the prices will be and the better the services will be.
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3 comments:
Why do Fair Tax supporters stand so solid on the prebates? All the prebates do is change the role of the IRS from tax collector to check writers. The Fair Tax would get much more support without the prebate scheme.
The prebate is what makes the FairTax a progressive tax. It totally untaxes the poor and the elderly and makes the playing field (or taxing field, I should say) equal to all. I would rather receive a check from the government rather than write a check to the government any day, as I think most people would. I can't understand why you think the prebate is drawing away support for the FairTax.
In my opinion, support would be greater than would otherwise be the case because some believe the government should be reduced in size, and why not take advantage of the abolishment of the IRS and NOT have to incur the expense of sending out prebate checks.
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