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Comment by ceejayoz | Hacker News Reader

FairTax's motto: "because the rich don't have enough advantages already"

edit: Downvotes? Seriously? FairTax shifts the burden dramatically onto the middle class. A rich person pays no capital gains, and as long as they don't go buying billion dollar yachts, they'll pay next to nothing percentage-wise.

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The FairTax replaces all taxes and the prebate makes it progressive. The rich actually have no net benefit because in the income tax world, they're still rich and in the fairtax world, they're still rich. What progressive income taxation says is that you want to pull down the rich to bring up the poor. We need to pull up the poor and leave the rich alone. The rich have their wealth and will continue to maintain it. A tax plan should be transparent and it should allow the poor to save money and invest their way out of being poor.

If the rich aren't pulling up the poor, who is? The middle class? I like the "it's progressive! progressive is bad!", incidentally.

I'd vote for any system that gives the poor more opportunity to pull themselves up. With FairTax they would have more income, pay no tax on essentials, could save/invest more, and reduce dependence on the government. That combined with no capital gains makes investment attractive to all classes.

If you give someone the opportunity, but they choose to remain poor then it is not the government's job to take care of them.

If however you do not give them that opportunity then we are just encouraging the poor to stay poor and depend on the government.

I have to imagine no capital gains would have more meaning to the middle class saving for retirement as compared to a wealthy person netting 15% more.

Lastly - expenditures are at least linear with regards to income if not exponential past $150k looking at a recent census. If you read the FairTax proposal it states that the rich would end up paying more tax overall then they do today.

The poor don't tend to have the money to invest in things that generate capital gains in any meaningful capacity. That such a thing is touted as a benefit for the poor is indicative of either disingenuousness or naïveté on the part of FairTax backers.

FactCheck.org has a well researched and well citied piece at http://www.factcheck.org/2007/05/unspinning-the-fairtax/. Among the findings - anyone making between $15-30k and $200k suffers under the plan, while the rich see their tax burden drop dramatically.

I read the article in its entirety. While what they propose (a very small fractional increase in taxes among the middle class) is entirely plausible, it misses the point entirely.

A consumption tax is optional. Meaning I only pay that tax if I consume above a poverty level. An income tax however is not. If I earn an income, I pay the tax.

The reason this is such a big deal is that it empowers the individual to change their financial situation. For example my taxes may decrease by 50% under FairTax, simply because I live a simple life style.

If someone chooses to improve their situation, they can take all the extra money, save, invest without capital gains, and see the turnaround much quicker.

This is in contrast to today's system which penalizes saving & investment and HEAVILY penalizes those who go out and start a business (I pay quite a bit more tax as a self employed individual).

It is also much more logical to be penalized for consumption vs. contributing to society (similar to the OP).

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