The "FAIR"TAX

I'm not denying that there are benefits to the Fairtax, but on the whole its a bad idea. There are two major, long-term flaws that stick out that you assume will not occur. First, the tax burden will shift. As I illustrated earlier, an economy that penalizes the rich is, at least in some sense, acceptable when compared to a tax burden on the poor. Because of the way our tax system is structured, which you say is fundamentally bad, the top 1% of our population pays over 85% of the taxes our government receives. This is because we tax 'rich' behavior, like investing and capital gains. Suppose we switch to taxing 'poor' behavior. The tax burden would do a 180. As I said earlier, there are massively more poor people spending proportionally more money. Now, the question becomes whether or not this 'poor' behavior will still be forced under the fairtax. If poor people aren't forced to spend more money proportionally, than there is no issue. Sadly, this isn't the case. The nature of having less money is that you have to spend more of what you have to get by. You argue that we would be giving them money back, which would compensate for taxing their inherent behavior. While this aims at remedying the problem, it isn't a full compensation. To elaborate. A sales tax would have to increase prices by something like 25%(ish) in order to compensate for the switch. You argue that competition and freedom from other taxes would make this up? This is a pretty lofty goal. Say a person spends 80% of his earnings. When we make that 80% go 25% shorter, as far as dollar to gains, he gets less for his money. If a person gets $20,000 a year, he pays about $3,000 in taxes, not counting deductions. So, conservatively, he spends about 12-14% on taxes now. That means new competition would have to account for the other half of the sales tax hike. Is new competition going to drive prices down 15%? You argue that the rich would forced to spend more and the poor would be able to invest more. This is also not the case. The tax systems incentives/disincentives do not bear weight on fiscal behavior. As I said earlier, people want to invest already. Poor people are simply less able. The way we make them able to invest is by making their dollar go further, so they can meet their means with less money, giving them more left over to invest and save. The fairtax does the opposite, as I illustrated above. Furthermore, rich people would LOVE a fairtax. They spend less already. So, taxing what they don't do as much would benefit them. Even if their investments are making less, they won't be 'forced' into spending in order to 'stay rich'. Quite the opposite is true. If the rich aren't getting returns on investments, they simply pull out of them. They don't have to do anything but beat inflation to stay rich. When long term investment yields go down, we are back to square one. Only this time, the burden is on the poor, their dollar doesn't get them as far, and the rich are left timid and refusing to invest. The fairtax would be an effective short-term economic stimulus because it floods the market with investment opportunities and capital. However, it has long-term economic ramifications, like increased poverty burdens, lower investment yields (which is equivalent to higher cost), and higher prices (which can't be overcome merely by more money and competition). While the fairtax has some economic advantages, it is fundamentally problematic. I am not defending the current tax system, merely discrediting the fairtax. I admit the flaws in the current system as far as cost and complication. But these can be solved by simplification. As far as flipping our tax code, that would be a bad thing, so I don't want to account for that.