Friday, October 17, 2008

Why the recession makes the Fair Tax even more important

The Fair Tax is a proposed federal sales tax on new consumer goods. It would not apply to basic essential items such as food and diapers, nor would it apply to used items. So this would encourage conservation when we need it most. Under the Fair Tax system, it would be theoretically possible for a middle-class person to go without paying any federal taxes at all so as long as he only buys used items and doesn't own a car.

This raises the value of used goods, which has several benefits:
1. People will take better care of the things that they already own.
2. They would receive more money in return when they pawn or resell a used item.
3. Less energy and resources are used, bringing down the price of oil.
4. We import fewer goods from overseas, reducing or even eliminating the trade deficit.


Anonymous said...

I support the fair tax system. However, in a recession, consuption goes down and effectively deprives the government of revenue. In a long term recession, this could prove troublesome.

Robert Enders said...

1. What would you consider to be long term?
2. Less consumption means lower prices, meaning the government would need less revenue to continue operating. I say this knowing that the government gets ripped off by contractors and vendors all the time. If the government is forced to operate with a smaller budget, maybe the company that sells $600 toilet seats can be talked into giving Uncle Sam a discount.