Wow. I'm almost suprised by that post. Under the so-called "Fair Tax" the tax payer doesn't control the amount of tax they pay, unless you assume that all spending is optional. If that were the case, very few people would pay any tax and the government would not be able to function.
The "micro managing" you speak of is a necessary part of our economy. For example, allowing deductions for mortgage interest encourages home ownership, deductions for employer paid health care encourages employers to offer health insurance, tax-free contributions to retirement plans encourages people to save for their retirement, and education tax credits encourage people to get an education. You may not agree with policy reasons behind the various Tax Code provisions, but for the most part they are good for our country.
I am sorry you don't have the "time nor desire" to address my "incorrect assumptions," you are the one who brought this up and I have taken the time to address yours. Not the least of which is that you are under the misguided assumption that our current Tax Code is regressive! Our graduated income tax is progressive, and as I have repeatedly pointed out the "Fair Tax" is regressive.
A progressive tax taxes those with more disposable income at a higher rate. Under a regressive tax the tax rate decreases as the amount subject to taxation increases. Basically, a regressive tax places a higher burden on the poor than the rich.
The current Tax Code is progressive in several ways. First, there is the basic graduated rates. Those with less taxable income pay at various lower rates which gradually increases with the level of income. Second, there are many deductions for necessities which work to make sure that those with less money don't pay income tax on the money they must spend on things like medical care and child care. Third, there are tax credits for the poorest of our citizens. Fourth, although it has its problems, the Alternative Minimum Tax prevents the problem that you keep mentioning, the rich get too many deductions and don't pay their fair share.
The Alternative Minimum Tax could easily be fixed, and I believe that it will be fixed soon. The problem is that unlike most provisions in the Tax Code, the amount of income you can have before you are subject to the AMT doesn't increase with inflation. Thus, it is beginning to hit the middle class instead of just the very wealthy as it was originally intended. Congress just needs to adjust the amounts in that provision for inflation.
Now, as I have pointed out several times, the "Fair Tax" is regressive because the taxpayers lose the benefit of the graduated tax rates. Those rates start at 10%... then 15%, 25%, 28%, 33%, and 35%. Under the "Fair Tax" everyone pays 30% starting with the first dollar they spend. Since most of those in the middle class spend all of their income, they would pay 30% on all of their income and it would only be offset by the $500/mo rebate that you say a family of 4 would get.
Worse yet, those who borrow money - spend on their credit cards - would actually pay tax on more money than they actually earn!
The Tax Code isn't perfect, but it is better than the "Fair Tax."
Best,
Robert A. Franco
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