Income taxes, in general, are anything but transparent.
A flat income tax would appear, at first glance, to be transparent. But all past flat income tax proposals have included a tax on savings and investment, which most people don’t realize is really double taxation, since their money is taxed when it’s earned and then again, when they pull it out of savings. If that double taxation isn’t visible and understandable to the average person, then it’s not transparent. However, should a flat income tax be passed that does not tax savings and investment and does not include a corporate or payroll tax, then such a tax would eliminate most transparency issues.
9-9-9, with it’s combination of a sales tax, stacked on top of both personal and corporate income taxes creates a fertile field for Congress to fiddle with the tax code in ways that will be confusing to anyone who doesn’t have a degree in accounting. However, we were generous and gave 9-9-9 one star, since the sales tax portion does add a slight degree of transparency to it.
But the FairTax again goes one better that the flat income tax. The FairTax is collected only once – at the point of final retail sale – thus making every penny of tax visible to the taxpayer, on the receipt. So every time throughout the year that a consumer makes a purchase, he is reminded of exactly how much tax he is paying. That’s absolute transparency.
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