the Fair Tax

[Oleander Ardens]

After thinking it through I came up with a very important point which hasn't been brought up by the article: the deferred effect of the "fair tax" as it is a sales tax. This is a godsend for people which large and very large savings/investments. It won't get taxed at all until money is taking out and consumed. This is critcal fact, and perhaps one which only meets the eye/mind of somebody with a certain interest in investment.

Take the example:

Say you earn $2 million a year. You can live pretty well spending $1 million, and as a result pay a mere 11 percent of that year's income in taxes. If the very rich pay less, that means more of the total tax burden in any year has to fall on somebody else, most likely the middle class. Reasonable people can disagree about whether this really matters -- over time, a consumption tax looks more progressive because the rich savers or their descendants eventually spend the money and get taxed. But Boortz and Linder say that all this worry about progressivity at the top is just jealous carping anyway. "We have very few Communists left in this world, but there are some," says the congressman.

So you pay 220000 in taxes, leaving you with 780000. You start to invest and yield a real gain of 5% per year. You do this for 20 years you have a inflation-adjusted capital of 28.871.516 while you played in all 4400000 in taxes. It would be much less capital if you had to pay income taxes (especially capital gain hurts). But the fun continues: You give half of it to your children, let us say 5 million to each of the three. Even if the they spend each 500000 (poor children) a year you defer your taxes for some years - which safes you huge money. Clever bastards. If you are rich and earning really a lot this plan is one worth supporting against the nasty unpatriotic, unfair, unamerican communists of this nation.