Rick, does this "fair tax" system actually come with the prebate check thing, or is that just what we're assuming that the legislation has the good sense to throw in once it takes effect?
I could see this working, but it'd be terribly unstable, as it would depend on the rich continuing to buy stuff. Since the rich are relatively self-sufficient in terms of supporting themselves (as in, they can stockpile everything they need), they could effectively go "on strike" and refuse to buy anything as blackmail to get the government to make a bill go a certain way.
Hmm, vague feeling I'm not being clear... lemme try and illustrate it:
Let's say there's a bill floating through Congress, say, a raise in the minimum wage. Predictably, most of the wealthy business owners don't like this. So, they all get together and agree to not buy anything unless the bill is rejected, announcing their decision to Congress. This would be a huge hit on their tax revenue under a sales tax system. So, not wanting to lose revenue, Congress rejects the bill. (I realize that not buying anything for an extended amount of time would be rather difficult and the hypothetical tactic could not be maintained for long, but since when has Congress ever thought things like this out?)
More realistically, there's the possibility that people simply won't want to buy as much, especially during a recession. People tend to want to hoard their money during bad economic times.
Also, would a sales tax work on products being shipped in from other countries?
And what about stuff from the Black Market? I suspect that black market activity would increase dramatically if we used ONLY sales tax.
but that is the right wing way....
