Democratic politicians and activists appear to have coordinated a nationwide campaign to mislead taxpayers about a proposal from Republican lawmakers that would transition the federal government to relying on sales tax rather than a host of other taxes.
The so-called Fair Tax is an idea that has circulated for years in conservative communities, and the proposal is more wonkish than controversial.
The idea is to eliminate federal income taxes, payroll taxes, estate and gift taxes, and replace all of them with a national sales tax.
The plan also creates a credit system so that no one ends up paying taxes on life’s basic necessities.
But high-ranking Democrats this week launched a campaign to make it seem as though Republicans were only interested in creating a new 30 percent sales tax. Dozens and dozens of tweets from Democratic politicians provided a cynical, one-sided, and manipulative take on the bill.
The Fair Tax perhaps the most progressive tax program debated in recent years, meaning it disproportionately draws revenue from the most wealthy Americans. Because wealthy Americans tend to spend more, they will be taxed more. And those on the lower end of the income spectrum will end up paying very little tax after the credits are applied.
But if you considered only the coordinate Tweet campaign from Democratic bigwigs, you would never know that the Fair Tax is actually better for low income Americans than the current complex, overwrought system.
The Fair Tax would also bring about a philosophical and psychological shift in how Americans think about taxation. Right now, income taxes and payroll taxes disappear from paychecks before most workers even realize it through withholding. That makes the payment of those taxes less immediate: out of sight, out of mind. But with a national sales tax, every tax payment would be a deliberate act.
The Fair Tax would also be a tremendous boon to freedom because individuals will only be taxed when they choose to purchase goods or services. Advocates for the policy also believe it will have tremendous economic benefits by removing the stifling effects of income taxes.
What are the drawbacks of the Fair Tax? Critics say it would open the door for a lot of tax cheating and sneakiness. Just think: an unscrupulous vendor could offer goods 30 percent cheaper for skipping out on sales tax collection. They also argue that the bill would effectively turn every business into a tax collections agent, though that’s already happening in most states.
Does the bill have any chance of passing? Probably not. The defining characteristic of the Fair Tax is simplicity, but a simplistic tax code is harder for accountants and lawyers to exploit. Indeed, some Fair Tax advocates have suggested that the reform would quite likely put almost all corporate accountants out of jobs.
The interests who benefit from complex, arcane tax codes are very powerful, and the last thing they’d want to see is a simple tax code that all Americans can understand.