8/22    I don't mean to keep spamming about this but I wanted to reply here:
          \_ You make an interesting case
             for "FairTax".  With 50 states, this
             could be prototyped by having 1 state
             shift from an income tax to a sales
             tax to see what happens.  A lab
             experiment, in effect.  Or you could
             do comparisons with countries which
             use a tax system similar to proposed.
             (or between states...)
             Last, we could phase in a fed. sales
             tax by 10% per year, and phase out
             income taxes at the same rate, ...
              \_ I think the problem with this is you end up with both
                 systems at once. That's exactly what the plan intends
                 to avoid (via repeal of 16th amendment). Politics being
                 what it is, you can't phase out the income tax in parts.
                 It's too complex and there are too many forms of it.
                 And how do you make sure it goes away and stays gone?
                 Plus I don't believe you could see benefits from a
                 halfway system. It would be worse than without: you'd
                 be adding to the complexity rather than simplifying.
                 We do have states to compare. But no country in the
                 world has a FairTax-like system. They have VATs on top
                 of income taxes.
                 \_ Yes, having both systems in place at once will be
                    clunky, but most businesses already have sales tax
                    handling built in, so it won't be a horrible burden.
                    And a gradual phase-in *will* allow the actual
                    consequences--intended and otherwise, to be
                    measured, and a reverse route to be taken if
                    the change is bad.  Also, the whole federal income
                    won't be dependent on a new untried system.
                    Just like the opponents of abortion, the advocates
                    of "fair tax" might find they get more traction
                    if they don't push for "all or nothing".  --PeterM
                    \_ Both together would be *more* complex than today. So you
                        \_ Only moderately, and most wouldn't feel the burden
                           because the new tax system *is* so lightweight.
                           No matter what, there will be pain in conversion,
                           why not spend some pain to reduce the *risk* that
                           the new system (any new system) brings?  And you
                           *can* reduce tax compliance cost by simplifying
                           the damn income tax at the same time.  --PM
                       get no drop in tax compliance costs. To really judge it
                       probably requires a reasonably long observation period.
                       And if the systems are muddled together it will be
                       hard to measure the real effect, when so many other
                       things affect economic performance.
                       You can obviously do a "trial run" at the logistical
                       level of collecting the taxes (have businesses "fake"
                       collecting the sales tax and submit the monthly returns
                       etc. for 6 months or whatever). You could gather
                       some statistics about that.
        \_ One reason you can't do a state-by-state "test" shift to another
           tax system is it would encourage too many people and corps to mess
           around with where they reported their incomes vs. their costs and
           current tax loop holes so you'd create an even bigger mess.  I don't
           know if the FT is good for the country or not but I don't think you
           can gradually shift to something that requires dramatic changes
           across the board to see the expected/desired results.
           \_ Btw, you don't always need to do a 'test' to figure out the
              result. -- ilyas
                \_ Ilyas, I still think in my gut that the middle class
                   is going to get screwed by the so-called Fair Tax, but
                   the counter-arguments to my objections are enough to
                   make me unsure that the middle-class screwing will
                   actually occur.  That said, I'd like more than a vague
                   feeling of fear, uncertainty, and doubt as an argument
                   against a specific proposal to clean up the mess that
                   is our tax system.  A 'test' isn't the only way to know,
                   but doing a test will certainly make trying the new
                   system a lot more palatable to everyone.  --PeterM
                   \_ Thanks for being honest.
                   \_ I just meant "read my thesis." -- ilyas