Pros and Cons of the Fair Tax Act
If you've experienced filing and paying taxes taxes, you know how confusing and how much of a hassle it can be. Many people don't only complain about the complex process, they also express that wealthy persons and families, businesses, and special interest groups pay less tax than they're supposed to due to certain exemptions and loopholes.
Because of these frustrations, the Fair Tax Act is gaining a strong following. This plan aims to replace the federal tax income system with a flat national sales tax. Supporters of the plan believe this would help to evenly spread the tax burden, get rid of loopholes, and take away the hassle of collecting taxes without affecting federal tax revenues. However, not everyone
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It motivates people to have more mindful and wiser spending practices.
With a national sales tax, you know that it will cost you more taxes if you spend more. Therefore, you'd think twice before using your credit card and purchasing more than you need. You can also be more motivated to pay off your credit card debts because these payments won't be taxed.
List of Cons of the Fair Tax Act
1. It requires a pretty high sales tax.
In order for the government to bring in the same revenue as the current taxation system, the national sales tax would have to be pretty high. Naturally, this means the prices of products and services will increase and in turn affect the current financial state.
2. It can slow down the economy.
The U.S. economy is heavily reliant on consumerism. However, the Fair Tax Act will discourage people from spending more, and this is not good for a capitalist economy.
3. It creates more opportunities for tax evasion.
Since intermediate goods won't be taxed, companies can claim that something is an intermediate good when it is really and end product just so they can take advantage of tax exemptions. Another method would be to trade with and purchase goods from other