"Unlike income taxation, consumption taxation does not discourage investment because it applies a zero effective tax rate to marginal investments. Unlike wage taxation, consumption taxation imposes significant taxes on investors who earn excess returns (and those with investments in place when the tax is introduced), thereby raising revenue from a generally affluent group without undermining incentives.[6] In short,consumption taxation offers a better combination of efficiency and equity than alternative tax systems."
This quote came from an excerpt from one of our FairTax people. Think about it - it makes sense. The buy-low, sell-high theory helps the investor in this instance. The investor pays taxes when he buys the stock, or mutual fund, or whatever, but when he sells he receives the full benefit of his (HIS) profits. The affluent invest more, thus pay more taxes. They also make more money when they sell - so what. They have earned it. It wasn't given to them on a Title 9 platter (or some other number of platter). And yet, the small investor gets to keep his profits also, therefore giving him more spendable income.
The world keeps going 'round and 'round with the FairTax. It just plain stops eventually, with the income tax, or the flat tax or any other tax the politicians try to sell you on. DON'T BUY IT!
With the FairTax, you keep what you have earned, you pay taxes only on what you spend. Makes sense to me.
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3 comments:
Investors and traders have it better than your interpretation because stocks are NOT taxed at purchase as they are considered an investment, not consumption. (Fees associated with the purchase, however, are taxed.)
Looks like I screwed up on this one, Ian. I will do my homework and we will talk about investments tomorrow. Thanks for the heads-up.
This is a great blog because it sums up the benefits of FairTax in digestible installments. Keep up the great work!
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