Friday, April 16, 2010

Fair Tax

Republican Congressman Kevin Brady has proposed a "Fair Tax" Plan in lieu of an income tax. Under the "Fair Tax", There would not be any income tax, instead a tax of 22% to 24% would be added to all consumer purchases. Under this plan everyone, including illegal aliens would be contributing with every purchase made. While this all sounds good, I am leery of this idea, after all, americans are hardwired to looking for the better deals and the sales when they shop. If a substantial tax is added to all purchases, in the mind of budget conscious consumers, that equates to a higher price for that item and consumers will cut their spending. That in turn will affect all aspects of capitalism and our economy. Also what about those consumers who use credit cards? Interest on Credit Cards have skyrocketed. What if something happens and the consumer defaults on the credit card. That means taxes, like credit card bills, go unpaid. Also, as we all know, taxes will increase, so we may start out with everyone paying 22%, but somewhere down the road, a politician will decide that it is not enough. 20 years from now, that "Fair Tax", may go up to 50%. In that scenario, consumers may stop consuming at all, except for bare neccessities. We need to change the tax code and limit the government, but I'm not sure that an additional sales tax is the way to do it. As for the illegal aliens that are not paying taxes. Take away their free medical, take away their foodstamps Arrest, detain and deport is the only answer to that problem. They are here illegally, they have no rights.

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