A: |
Good news: Yes. And good news: No. The good news for “yes” is that many countries and states have consumption taxes, and so we know that the FairTax will work well. The good news for “no” is that no country has a system as pure as the FairTax, so we will be able to experience economic growth and benefits beyond those achieved by any other country on earth.
Not only have consumption taxes been tried, but the U.S. is unique in that it is the only developed nation that doesn’t have them. Other nations have income taxes, and other nations have payroll taxes. But these Asian and European nations also have consumption taxes, sometimes in the form of a VAT tax and sometime in the form of a sales tax. While we certainly do not want to repeat the Asian and European model of having income taxes, payroll taxes, AND consumption taxes, we can absolutely look at these other nations’ taxes and learn that consumption taxes are efficient and promote growth.
Forty-five states in the U.S. currently collect a sales tax, and twenty-two of those states collect more than 50% of state revenue from sales and excise taxes. Six states collect more than 75% of their revenue from such taxes. Since these 75%+ states include Texas and Florida, the third and fourth largest economies in the U.S., respectively (California and
New York are first and second), it is safe to say that using the sales tax as a fundamental revenue source has been tried on a large scale. In fact, the Texas and
Florida economies are so large that they each would be in the “Top 10 Economies in the World” if they were independent countries. |
