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I am writing in response to the letter from Glen Terrell of Arlington, Texas who wrote in favor of a “Fair Tax” on Aug. 4. Mr. Terrell encouraged readers to educate themselves about the Fair Tax, and so I have done.
According to what I learned, the “Fair Tax” plan would eliminate the current federal income tax system and replace it with a flat national sales tax of at least 23 percent. Everyone would pay the same percentage of tax on purchases (thus the “fair”) and there would be no obvious loopholes.
There are several problems with this, the primary being the old adage that equal is not the same as fair. When the CEO of a company earns more than 300 times the pay of the company’s workers, this is considered (by some) to be fair, but it is by no stretch of the imagination equal. How then can it also be fair that this CEO pays the same percentage of taxes as his workers on purchases — a much lower percentage of his take-home pay?
A minimum-wage worker spends 100 percent of income on goods and services required to make it to the next paycheck, so this worker pays 23 percent of her entire income in taxes. Mr. CEO, on the other hand, actually spends a very small portion of his income and therefore pays a much lower tax rate than the worker who is scraping to get by. Middle-class workers, too, spend more of their income (helping, incidentally, to keep the economy working) and so, in the “Fair Tax” system, pay a much higher percentage in taxes.
The current income tax system certainly has its flaws. It is too complicated and has far too many tax breaks and loopholes for those who can figure out how to take advantage of them. The proposed “Fair Tax,” however, is in no way a fair or economically sound alternative. As Mr. Terrell suggested, educate yourself. There are more disadvantages than advantages.