Comment Re:Let me get this right (Score 1) 839
It's also a fatally flawed concept in that there's no feasible way to avoid the taxation up front; you'll get it back later. This leads to inevitable binge spending on things that people don't need, rather than encouraging saving by doling the excess funds out a little bit at a time. (At least the Fair Tax does it monthly; some schemes go yearly, and that's just a disaster and a half.)
By contrast, with income tax, people making below a certain level avoid paying it up front (at least if they fill out their exemption forms correctly), which means they see more money in every paycheck, and it doesn't look like an extra check that they can spend, so psychologically, they're more likely to save it.
Also, the entire concept is flawed, because it operates under the mistaken assumption that the rich spend proportionally to the poor. The reality is that after someone's basic needs are met, most people don't spend that much of their income. People always imagine that rich people are constantly spending money on fancy boats, big houses, expensive cars, etc., but the reality is that they didn't become rich by spending their money. They became rich by saving it and investing it.
So any scheme that eliminates all taxes on stocks—where the rich spend the vast majority of their money—is basically a giant windfall to the wealthy. In effect, such a scheme would rapidly eliminate the middle class; anyone rich enough to spend most of their income on investments would get richer, and anyone below that magic fuzzy line would quickly become buried under the excessive sales tax rate and would join the ranks of the working poor.