Quoth kiddleddee: > Another problem that I see with the "fair" tax is this: According to > even the "Fair Tax" people, since businesses pass their tax burden on > to consumers in the form of higher prices, income taxes (directly or > indirectly) make up more than 20% of the retail price of products - > others say MUCH more! Does that mean that with the passage of > the "fair" tax, retail prices will immediately come down 20% (or > more)? Or does that mean that the "fair" tax will mean a 20%(or > higher) government-mandated boondoggle for businesses at the expense > of consumers?
This would eventually iron itself out through competition. Businesses never lower their prices more than they think they have to in order to make sales (and why should they?), but competition will force price decreases. Lower the cost of all products to all businesses by 20%, and some of those businesses will cut prices in order to attract customers, forcing others to do the same. However, there would either be a time lag, or else some businesses would take it right on the chin: Their inventories of non-perishable goods which were purchased at prices reflecting the old tax burden are either going to have to be sold at the same old price PLUS the new tax, or else they're going to have to lose money. Another problem which some people are beginning to notice: What about people who earned money and saved it AFTER paying income taxes? They were taxed once when they earned it, and now they're going to be taxed 23% on it when they spend it. Remember how cool the Roth IRA was? You got to put after-tax dollars into it and not be taxed on it when you withdrew it and its interest. Well, guess what -- when those Roth IRA dollars come out of the account and get spent, they're going to be taxed again after all. Got a savings account, CD, etc., that you paid taxes on the principal of? 23% more tax when you spend it. Got a stock portfolio that you paid income tax on for your original stake and capital gains tax every time you sold high? Well, when you sell those stocks the next time after the "Fair" Tax goes in, and spend the money, another 23% goes away. Worked hard, paid your taxes, bought a used "starter" house with what was left and now you're ready to sell it and build your dream home? Well, you may not get taxed on appreciated value, but that original $50K of income that you paid taxes on before investing in the original home? 23%, bubba. Anywhere that you've saved or stored money or value after paying taxes on it, that money gets taxed AGAIN the instant you liquidate and spend it. Tom Knapp ForumWebSiteAt http://groups.yahoo.com/group/Libertarian Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/Libertarian/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
