I've been having a discussion about the Fair Tax with some folks on another forum. I've run into some questions I don't know the answers to.
One guy is rather adamant that the Fair Tax just doesn't tax the rich very well, and that they will be able to skate on the tax burden. That means that the little guy will take it in the shorts and have to pay a higher proportion of his income in taxes than a rich guy.
His example was in Ted Turner. Turner gave $1 billion to the UN and when he gave it, he stated that a person couldn't spend much more than $200 million in a lifetime, and that meant he could afford such a donation. So, that means that the super rich would only have a lifetime tax burden of 23% of the $200 million and the rest is tax free. A valid point to which I don't have a good response. The average Joe would have a 23% lifetime tax burden. Before you point out the prebate, I'm well aware of that reducing the actual number, just too lazy to scratch it out.
Other points I need clarification on. How will old real estate be treated? If Ted wants to go out and spend a couple of million on a beef farm in Montana, would that be tax free?
One thing I have been wondering about was the business being tax free portion. Lets say I have to take a business trip. How does the travel agency decide whether I should be taxed or not? Will there be some sort of card to give me tax free status? How about going to the local gas station to fill up my company car? How will they know whether I'm putting it in a company car or a personal car? How about the 3 martini lunch I'm having with business associates? How does that become a business expense? Do you save receipts and get a refund?