Adam M.
Costello :
Soap
Box
ClearTax: A counterproposal to FairTax
FairTax is a proposal to eliminate all
existing United States federal taxes and replace them with a single
simple national sales tax and a monthly payment to each family (called
a “prebate”). There are several things I like about this
proposal:
- Simplicity. The complexity of current tax system causes several
problems. There are so many interacting deductions, credits,
qualifications, exceptions, special cases, etc, that it's nearly
impossible to reason about how fair or unfair it is, and it's too easy
for special interests to influence obscure rules in their favor. Also,
it creates a large burden on ordinary taxpayers just to comply with the
tax law, and diverts the brainpower of many smart people to work on
minimizing tax bills instead of solving real problems in industry and
society. The FairTax system is so simple that individuals wouldn't need
to file tax forms at all.
- One tax rate. The current system has progressive income tax rates,
a capital gains tax rate, a regressive payroll tax, and a slew of
credits and deductions that are subject to income limits and phase-outs.
It's absurdly complicated to figure out, if I earn another dollar, how
much of it will I keep? For poor people the answer is often very little
of it (because they lose credits), which is perverse.