View Full Version : The Flat Tax vs. the Fair Tax

05-20-2009, 11:36 AM
How timely is this article! (http://www.realclearmarkets.com/articles/2009/05/the_flat_tax_vs_the_fair_tax.html)

I'd rather see the Fairtax but I'll take anything but what we got!

If there’s a positive to the leftward economic lurch among our political class, it has to do with the certainty that the imposed initiatives will fail. No matter the political party or supposed ideology overseeing it, when politicians seek to share the gains of the productive, their efforts come up short. Simplified, collectivism applied is collectivism’s capitulation.

So while there’s good reason right now to be pessimistic, there’s also reason to be optimistic given the certainty that we’ll eventually move in the other direction. On the tax front, whatever the result of President Obama’s attempts to move the cost of success upward, his efforts insure a strong response from those eager to simplify the income tax, or abolish it altogether.


The obvious negative of a flat tax has to do with the basic truth that taxes on income are a price put on work. Work is penalized when income is taxed. And while the most productive among us would presumably embrace with vigor a lower, flatter rate, there is the problem that usually materializes under low rates of taxation whereby the rich provide the vast majority of federal revenues. In that case, it seems a flat tax perfectly applied would include a ceiling after which the rate would go to zero.

Considering a consumption tax, or what its advocates call the Fair Tax, if applied correctly this is surely the ideal tax. Rather than a system that penalizes work and savings, we should have a tax that only shows up when we consume. This would insure that more money would be saved and flow to productive investment, plus with each purchase, Americans would see up close the horrific cost of government