Goal: Un-Tax the Cost of Living
Embedded corporate and payroll taxes more than offset any changes to income tax progressiveness that is supposed to un-tax the cost of living. Therefore, making it less progressive helps very little. But to be generous, we awarded one star for a less progressive income tax.
Though a flat income tax, by its nature, hits the poor hard, the elimination of a corporate and payroll tax would soften the blow to the poor slightly. Then if a dependent deduction were included, tax on cost of living would be almost eliminated.
Since 9-9-9 contains three forms of tax, it has the problems of all three. A standard dependent deduction on the personal income tax portion of 9-9-9 would help only marginally, since there would still be corporate taxes embedded in the price of every purchase.
The FairTax, on the other hand, includes a prebate that is equal to the amount of tax that would be paid by a family spending at the poverty level, for a family of that size, on all new retail goods or services. Every family of a given size will get the exact same prebate. This completely un-taxes all spending up to the poverty level, for all taxpayers, regardless of spending level. After accounting for the prebate, someone spending at or below the poverty level pays no tax at all. Someone spending just above the poverty level, will pay very little tax, as he will only pay sales tax that is beyond the prebate amount maybe one or two days a month. There are no complex calculations for taxpayers. It just happens. But poor or rich, spending up to the poverty level is not taxed at all under the FairTax.
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