Fair Tax: Good idea or Con Job of the Century?

Okay, I was driving home from the city today and I heard a talk show host talking about the proposed Fair Tax. At first I did not understand what the big deal was. It was basically a nationwide sales tax. The big selling points were that no one would pay any federal income tax, medicare tax and social security tax and more importantly the repealing of the 16th amendment and getting rid of the IRS.

What?

Mike Hukabee seems to be mostly on board for this.



Really?

Even Herman Cain agrees that it is a good idea.

Hell yeah, where do I sign?!?!

Oh, if only it was so easy.

Okay, here are the problems as I see them.

1. Does anyone really think that the US Government will really allow the Federal Income Tax to die? It might allow it to be shut down for the short term, but, how easy would it be to bring it back in the name of a "national emergency"?

2. Everything you buy will be taxed. EVERYTHING. Food. Gas. Services. Utilities. A $200 electric bill will cost $260. A $20,000 auto will cost $26,000. A $200,000 home will cost $260,000. Anyone think that would be a good thing? Anyone want to get in line to pay more?

3. States will be taxed for anything that they buy or any service that they use; from the electric that they use to power buildings to the paper they buy to write memos. Does anyone really think that these increased costs added on states, already on the brink economically, will not be passed on to the residents of the respective states?

4. Prices will go up. If a company makes sporks, they are going to pay more for the plastic, more for the electricity to run the machines, more for the boxes to package the sporks in, more for insurance for their business, etc. You get the idea. The company will not be paying any corporate tax but the cost of running the business will go up across the board. It remains to be seen if the increase in operating costs will be less than or more than the old tax. I doubt that will be the case.

5. Prebates. Oh my. I don't know about you, but, this is nothing more than welfare. Plain and simple. The government is going to give everyone a check every month. For doing nothing. This is ostensibly to help those under the poverty level not be burdened by the new tax. But, wait. One of the selling points is that the tax would be fair and not be a burden to people. If it is not a burden then why the prebates? And, even more importantly, where is this money going to come from? A lot of people would welcome $500 - $800 a month but I am afraid that it will bring more people to the government entitlement trough. And once you are there, it is hard for a person to get away. Just look a the banks that want to return the bailout money. If we as a people accept a "bailout" from Uncle Sam, will the government be able to tell us how we spend it? Will the government come in and set a budget for us?

The more I think about it the more I am sure that it is not the way to go.