New Taxation Methods

Mood: low energy

Uncle John was trying, with little success, to explain two of the proposed replacements of the current taxation method to Gran. They're quite simple, really:

1. Flat Tax - everyone pays the same percentage of tax, using a form the size of a postcard to file


2. Fair Tax - income tax is replaced by a national sales tax

Though the Flat Tax method is better than what we have now, it doesn't solve key problems. For example, people could still cheat, and there's still paperwork, however little, that must be filed by a certain date.

Fair Tax, on the other hand, would entirely eliminate both paperwork and tax evasion/fraud. Also, it's based on the amount a person spends, as opposed to the amount a person earns. This would encourage saving, and discourage overspending on luxury items. This method is currently being endorsed by the American Independent party.

My only real concern about the Fair Tax system would be that it would give businesses a big responsibility, which I'm sure would come with a significant amount of added paperwork. And unfortunately, small businesses would be the hardest hit. If enough government support is provided to these businesses, this might not even be a factor.

Obviously, I think the Fair Tax is, well, more fair. However, because it is such a drastic departure from the current system, I think it is less likely to be used in the near future.

On the other hand, I can see the Flat Tax being widely accepted. This, perhaps, makes it a more realistic change for the short term. Perhaps it could be a stepping stone used in finally reaching the utopia of the Fair Tax?