Leftist opinion on FairTax?

[Ehakamanda]

I've had some people talking to me promoting this American FairTax plan including my parents. Everyone I know who supports this plan is very conservative, and I'm just very curious to read leftist critiques or perspectives on the plan if anyone knows about it and can shed some light.

fairtax.org is the main website.

Thank you

[Red Commissar]

From the way it's pitched, as a national-level sales tax, I don't think it will be "flat", it will inherently be regressive in the long run. Even with their concept of a "rebate" and rewarding those who report black markets being used to make the concept seem progressive, it is regressive. Sales taxes are regressive as far as I've learned and others have told me.

FairTax arises out of the legitimate issues and frustrations people have with the current national income tax codes, with it being frustrating, confusing, and taking a considerable chunk of one's income with no tangible results.

However, to me at least, it relies too much on pitching it as "cheaper" and "easier" than justifying whether it could float this country's public finances. It's just an overblown sales tax applied nationally.

I'm not sure if I've seen too many people, at least from a leftist perspective, too warm on the FairTax's ideas. It seems to me at least, that FairTax, is more of a market liberal's wet dream, painting it in a way to appeal to frustrations taxes have been applied in modern times.

That's my perspective on it anyways. I'd be interested as well if there's a serious leftist analysis or critique of the proposal.

[Demogorgon]

Sales taxes are always regressive meaning that they charge poorer people a higher proportion of their income in taxes than richer people. I think that on that basis alone it would seem unacceptable on the face of it.

[Robocommie]

It's complete nonsense. For people who calculate their income week by week, instead of annually, a general sales tax on essentials like food and drink is an attack on the common man and a break for the wealthy.

The working class spend a larger percentage of their earnings than the rich on groceries and other consumer goods. And because this tax would be applied directly to sales of goods, and not directly to the income earners, it would be impossible to have a progressively based tax system. This is why it appeals so much to the wealthy; that extra 50 cents per pound of beef isn't going to mean a damn to them, and it's a hell of a lot less of a concern to them than having to file taxes on their six figure salaries.

And even if you ignore the impact this would have on American families, you also have to consider the likely impact it would have on the economy at large; increased taxes on sales means people will have less money overall to put towards purchases of consumer goods, which means they'll lose spending power and likely cut back on spending overall. This means businesses will lose sales, ensuring a loss of profits and then probably layoffs, which just makes things even worse.

It's dumb. To talk like a market liberal, it's de-incentivizing consumption.

[Physicist]

It's complete nonsense. For people who calculate their income week by week, instead of annually, a general sales tax on essentials like food and drink is an attack on the common man and a break for the wealthy.

Well to be fair the FairTax (no pun intended) apparently excludes non-prepared consumables and clothing, but I agree that it's just an incentive to push the tax burden on lower tiers. That said I don't think everyone who supports the proposal is doing so out of a mean spirit for impoverished Americans. The income tax system is currently corrupt, and I have my own objections to its implementantion as it clearly has staged different workers against each other.

[Die Neue Zeit]

From the way it's pitched, as a national-level sales tax, I don't think it will be "flat", it will inherently be regressive in the long run. Even with their concept of a "rebate" and rewarding those who report black markets being used to make the concept seem progressive, it is regressive. Sales taxes are regressive as far as I've learned and others have told me.

Indeed:

http://www.revleft.com/vb/abolition-indirect-and-t117359/index.html

[J. MacLean]

You can see the effect of a high sales tax that excludes essentials quite well by looking at the UK. Note the extremely regressive nature of 'all indirect taxes', the majority of which is VAT (sales tax at 17.5%).

taxresearch.org.uk/Documents/ons7.jpg

The graph below shows the estimated effect of FairTax in the USA (including rebates). Note the tax increases for everyone between $15k and $199k, and the massive tax cut for everyone over $200k.

argmax.com/mt_blog/archive/trp_fairtax.jpg

[Robocommie]

Well to be fair the FairTax (no pun intended) apparently excludes non-prepared consumables and clothing, but I agree that it's just an incentive to push the tax burden on lower tiers. That said I don't think everyone who supports the proposal is doing so out of a mean spirit for impoverished Americans. The income tax system is currently corrupt, and I have my own objections to its implementantion as it clearly has staged different workers against each other.

Yeah it probably is unfair to say everyone who supports it hates the poor, after all, plenty of working class folks do support it. Fair point.

Incidentally, what is covered by non-prepared consumables?

[CartCollector]

The graph below shows the estimated effect of FairTax in the USA (including rebates). Note the tax increases for everyone between $15k and $199k, and the massive tax cut for everyone over $200k.
http://argmax.com/mt_blog/archive/trp_fairtax.jpg
What's also interesting to note in this graph is the large rebate it gives to those with annual incomes between nothing and $15,000. In other words, this plan hits those that make between $15k and $200k the hardest, with the largest percentage increases on those that make $30k to $50k (average American annual income is around $45k) while helping everyone else. You'd think a taxation plan that did that would face all sorts of opposition from the middle class.