Why Does The Fair Tax Increase Economic Efficiency?
The Fair Tax will lead to increased economic efficiency by eliminating unnecessary taxes, time wasted filing taxes, money wasted filing taxes, time and money wasted by the government in tabulating taxes, auditing, preparing and mailing refunds, and so much more.
Consumers will receive a higher level of utility from every purchase they make and every dollar spent because the consumer will be empowered to directly decide where every last cent goes. If buying something at its market cost gives a person more utility than saving the money, the consumer will be able to do just that without having to consider–or forgetting to consider–the cost of any taxes. It places the full value of the tax directly in the consumer’s face every time he or she decides to spend money.
Likewise, people’s utility earned from working and getting paid will increase. If a person chooses to accept a job that pays $15/hour, the person will know that they’ll be bringing in a net income of exactly $15 for every hour worked. Again, any consideration of taxes, which will no longer exist, becomes moot. Everything is laid out in the open for each person to use his or her own unbiased discretion when making any economic decisions.
The Fair Tax will significantly decrease the government’s power to engage in pork-barrel spending. Why? Because the consumer will be the deciding factor that determines how much tax income the government generates each year. However much money the American people choose to spend on non-essential, taxable goods will determine how much money the government has to balance a budget with. Individuals and/or groups will have gained the power to stage mini-protests by forgoing purchasing unessential items or expensive items if they believe the government is not spending responsibly.
Because every individual will have personal choice to decide exactly from where and how much money they will earn and to decide exactly when, where, and how to spend every single cent they earn, society will see a massive increase in utility, i.e. personal happiness, as billions upon billions of the people’s paycheck dollars will not be squandered away by a reckless government every week.