Goal: Revenue Neutral
Not knowing how Congress may change tax rates, we can only assume (maybe too generously) that any changes to an income tax, be it progressive or flat, will be nominally revenue neutral. That leaves 9-9-9 and the FairTax.
Of course, 9-9-9 was never properly thought out. If you remember, it was hurriedly cobbled together, not as a viable plan, but as a talking point, to boost a sagging presidential campaign. Nobody was supposed to actually evaluate the scheme till after the election. But shortly after its introduction, many economists began pointing out credible flaws in the scheme, which forced Herman Cain to make hasty modifications to it. In fact, it keeps getting modified, while more than a few top economists still say that 9-9-9 won’t create enough revenue.
On the other hand, unlike 9-9-9, that was hurriedly created by political operatives, the FairTax was designed over several years, by numerous top level economists, whose instructions were only to create the best possible tax system and make it revenue neutral. More than $23 million dollars have since been spent to develop the FairTax and insure that it will be revenue neutral.
But alas, there are still some economists who tell us that the FairTax will only remain revenue neutral if no new jobs are created. But as we’ve already learned, since the FairTax will encourage both the return of expatriated dollars and new foreign investment, those dollars will in turn, create huge amounts of new jobs. In fact, the FairTax could soon be creating more revenue than the current system, while each individual would be paying less.
However, as we have done with other proposals on other goals, we are only looking at how it would start out and that would be revenue neutral, which is why we gave it five stars.
But let’s look a few years ahead. As more jobs are created under the FairTax and revenue increases, voters, who under the FairTax, see every penny that they pay in tax on every sales receipt, would demand of Congress that they lower the FairTax rate, instead of spending that additional revenue. Congress would want to spend that extra revenue and in the past they wold be able to do so. You see, people always want lower taxes. But under the current system, they don’t think about taxes but once a year and so, they don’t keep the pressure on Congress and Congress does what they want. But under the FairTax, that constant sales receipt reminder would keep most taxpayers focused on the issue and the rates would be forced down. But think about it for a moment. Wouldn’t that be a nice problem to have?
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