Fair Tax

First, I agree with what pro has written as common advantages and most of what he wrote as the fair taxes advantage over the flat tax. In spite of these advantages, the fair tax fails in many other places. Although my opponent talks about his tax will force illegal immigrants to pay taxes, the reality is much different. Most Illegal immigrants already pay taxes [1] and these high taxes will hurt poor immigrants coming into the country and dissuades intellectuals such as doctors, engineers, etc from immigrating who will have tremendous cost coming into the country. Illegal immigrants, contrary to popular opinion, have a neutral to slightly beneficial effect on the economy, as they cannot use many of the services they pay into, do not directly compete with Americans for most of the job they do, and provide services the average American would not do for a reasonable price. The 21% rate that pro has told you about is in fact a teaser rate. To further explain it You are familiar with seeing the price of an item ($100) and calculating in your head what the sales tax would be ($5 at 5%). The $100 is known as a tax exclusive price. $105 is the tax inclusive price. There are two ways to state what the taxes are in this case. You could say the sales tax is 5% of the price of the item tacked on, or you could say it"s 4.8% of the total price you pay at the register. That is to say $5 is 4.8% of $105. So your state could advertise that your sales tax is 5% of the tax exclusive price or 4.8% of the tax inclusive price. In the interest of public relations, it would appear the proponents of the fair tax quote the equivalent of the 4.8%, which is the 23% number discussed already. When you convert the 23% tax inclusive number into the exclusive number (like 5%, a number we can actually relate to) the actual Fair Tax rate is 30%." [5] Not only is the actual tax rate higher, it's been calculated that the total percentage tax (assuming there"s no slowing in amounts of purchases) about a 34% [5] tax is necessary to compensate for the loss of the income tax. Here in lies the problem, the best way to lower the personal cost of the tax, people have to spend less. This will reduce the amount of spending, and too little spending is not good for the American Economy. This paradoxically would force the government to increase the tax rate and affect the sales and manufacture sector in America (more expensive goods) and probably many thousands would lose their jobs. This high cost for goods, would create a black market demand for goods as lower and middle class families would be priced out of affording many goods due to taxation and increased cost of housing. This black market would increase violence, hurt the economy further and favor the economies of nearby countries. Another problem is with goods bought during the transition period with credit would essentially go untaxed. Although the federal income tax has disappeared, state taxes still exist and many residents in progressive states such as NJ, CA, or NH, you could be paying as much as 40% in sales tax and an Income tax. [6] Look at citations [7] and [8] and [9], which all show the problems with the GST when enacted in Australia, which was much less severe than what Pro has prosposed. The flat tax on the other hand does not bind the amount of goods purchased with the well being of our national coffers. It encourages growth by not excessively taxing the "wealthy" and allows to stimulate the economy through the purchase of more goods with no federal tax. Although both of the taxes are better than the progressive tax, one of them is inherently flawed and sets it's self up for failure due to the taxation of a vital part of our economy. [1]- http://www.policymic.com... [2]- http://www.moneycrashers.com... [3]- http://www.businessinsider.com... [4]- http://www.migrationpolicy.org... [5]- http://weakonomics.com... [6]- http://www.moneycrashers.com... [7]- http://www.abc.net.au... [8]- http://web.archive.org... [9]- http://espace.library.curtin.edu.au...