Goal: Reward Savings and Investment
Since an income tax is, by definition, a tax on productivity and rewards only spending, none of the forms of income tax can be said to, in any way, encourage savings and investment.
The best that can be said for any form of income tax is that a flat income tax that doesn’t tax savings and investment would neither reward nor punish savings. So we gave it one star for not punishing savings and investment.
9-9-9 really doesn’t do much in this area, since two-thirds of 9-9-9 are income taxes that punish savings. But since a third of 9-9-9 is not based on income, we were generous and gave it one star.
On this issue, the FairTax stands alone. Since the FairTax is only collected when money is spent, it encourages savings and investment. You have a choice of when you pay tax. If you only pay tax when you spend money, it’s a strong encouragement to invest your money, instead of spending it, so you can have more money to spend later. In other words, you can spend now and pay tax now or you can save now and have more money to spend later.
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