8-1 Discussion: Is FAIR Tax the Right Fix? Discussion Topic
Starts Sep 28, 2019 11:59 PM
For
this discussion, you will evaluate the impact on current tax
minimization strategies of converting the U.S. tax system to a national
sales tax. These strategies include attempts to switch activities from
one period to the next, change the type of an activity, and shift income
among taxpayers.
Critics of the current tax system allege that
taxpayers can use strategies to avoid tax obligations, and that the
current system favors certain taxpayers over others. One proposed
alternative is a national sales tax. For this discussion, read the open
letter to Congress in support of the Fair tax in the Required Resources
for the module. Then, consider the consequences of converting the
current United States income tax system to a national sales tax on sales
of goods and services. Under the new system, certain necessities like
food would be exempted from taxation, and low-income households would be
granted tax refunds. Would such a tax system eliminate incentives to
shift activities (a) from one period to the next, (b) from one type to
another, and (c) from one pocket to another? Explain, citing your
sources.
