The "Fair Tax" isn't really fair but helps the rich and hurts the poor.

I. The Fair Tax would be "progressive" in the sense that it would avoid taxing financially challenged (i.e., poor) people for basic necessities. This is accomplished by means of a "prebate", which according to Fairtax.org would be $2,348 per year for a single person or $6,297 per year for a family of four. The Fair Tax is calculated to be "revenue neutral", meaning that all current government services would continue to be fully funded because the money that is raised from this national sales tax would be equal to the amount of revenue that is lost due to the repeal of federal income taxes. Programs such as Social Security, Medicare, etc. would be unaffected. II. Because this tax system is consumption-based rather than income-based, people could exercise a certain amount of control over how much tax they pay. Since the tax is only applied to new (not used, secondhand, etc.) items at the point of sale, a relatively frugal person could avoid paying taxes on most things, and might even make money because of the "prebate". Meanwhile, wealthy people who choose to live "high on the hog" without paying attention to their spending choices would probably pay more tax. III. Since the Fair Tax only taxes consumption, it would not punish businesses for expanding and creating more jobs, investing in research and development, or donating to charity. Also, because the individuals who create and maintain those businesses would have more disposable income to expand and compete in international markets (assuming that they make relatively wise choices, see the point above). IV. The base price of goods and services (that is, their cost of production before adding any taxes, profits, etc.) would be lower because the embedded costs of the current income tax system would no longer be a factor. This would partially offset the increase in the total price of new products and services that would result from the Fair Tax. V. From the standpoint of government revenue collection, the "problem" of tax evasion would be reduced because people who currently resist paying income taxes and/or derive their income from black market sources would be taxed automatically at the point of sale whenever they purchase new goods and services. Moreover, the government would no longer need to spend taxpayer money in order to chase down income tax evaders. VI. A national sales tax such as this would be much more transparent than the current tax system. There would be no more loopholes, special exemptions, payroll taxes, embedded costs, or other factors that allow people under the current system to avoid realizing how much tax they are actually paying. With the amount of taxation clearly visible to the general public, people (hopefully) would be less likely to tolerate wasteful spending, corruption, and inefficiency in government, resulting in lower levels of taxation and a stronger economy overall. VII. Trickle-Down Effect. My oppoent says the rich is helped out much more then the middle-class. He even does math to show this. Ok, mathematically it does. However he is missing one big fact. The Trickle-Down Effect. This theory was the basis for supply-side economics, i.e. reaganomics. This brought the US out of one of the worst times in history. Because of progressive tax reform, the US's economy was practically destroyed. Only until reagnaomics, which had high tax cuts did the economy flourish. Why? Because of the trickle-down effect. This theory states that if the upper class gets the load off mathematically, the middle class and poor will get the same effects. ill show you through diagram: Rich Company ---> Pays employees (Middle Class) ---> The Upper and Middle Classes then spend into the economy ---> Other money goes into charities, etc, to help the poor. Now extend this to the fair tax: It will open more jobs and companies, it will lead to a larger tax break for middle and lower classes. I.e. we have achieved what my opponent says wont happen. It has worked up until now, and now people want to use "progressive" reform, which has at one point almost destroyed our economy. Rebuttal: My opponents argument has 3 huge flaws. 1) He never shows you mathematically, all the tax breaks associated with the Fair Tax 2) He fails to show how the "progressive tax" will work. 3) He is only looking at the immediate, not the overall final effect.