Historical Support for the FairTax Approach?
From reader Tracy Farr:
I am a College Student participating in a Tax Competition hosted by PriceWaterHouseCoopers. We have been thinking about using a tweaked form of Fair Tax to resolve the case that they have given to us for a “mock-Tax reform”.
By and by we (my team - made up of a few masters students and those in the accounting program) have been very impressed with the FairTax and its ability to resolve many of the issues at hand.
My question is this: Are there any examples of other countries that have instituted a similiar tax system and found success, or is the idea, thus far, completely theoretical? Could you possibly list a few positive examples where the FairTax has been implemented with success?
Kind Regards,
Tracy Farr
Can anyone help her out, here, with historical examples?
UPDATE (11/4/06) - Tracy writes:
I just wanted to thank you for the information and responses you gave me. Yesterday was the competition and my team took First Place using an idea largely founded on the FairTax but tweeked for this individual country’s needs. We will be moving on to the National Finals now. I have learned so much about tax reform through this experience and truly have seen so many benefits from the FairTax system. Again Thank you for your help.
Thanks to everyone who contributed information on this topic.
You could probably find several examples of sales-tax-only setups (like Florida and Texas) but I can’t think of any that would use a prebate mechanism, or any that provide for tax-free business. The concept of taxation without exception, but only once, is also novel. Most sales taxes have historically been cumulative in nature and most governments have creates numerous exceptions for sales taxes.
I’ll poke around and see if I can find anything similar.
I would refer Tracy to the following link: a paper by Charles Adams, a proponent of abolishing the income tax and using sales taxation instead.
http://www.lewrockwell.com/orig2/adams8.html