I stumbled across the fairtax site for the first time today. I find the whole concept to be very interesting and I haven’t yet seen a convincing rebuttal to its benefits. By far, it benefits those on the lower end of the scale and accomplishes a widespread leveling of the playing field.

The old/new house discussion gets a lot more interesting. Since you’ll be paying a consumption tax on a new house (we actually do pay this in Canada), the prices on the new houses should be higher. In return, this should help increase demand in older houses and drive their prices up. My internal armchair economist believes that the two might end up being approximately the same relative price after the whole thing is said and done, with the old house’s price being discounted by the buyer’s perceived costs to “fix it up”.

One of the commenters on StumbleUpon’s review of the page noted that there might be a problem when a contractor remodels an old house. He asks who pays the taxes. If you read Fairtax’s FAQ, however, they indicate that both “goods” and “services” are taxed. The taxes would obviously come from what the contractor charges their client. Since any business owner will know that you include the costs of both labour and materials in your billing price, that’s obviously going to be where the Fairtax is charged.

With the advantages you can see with a Fairtax-like system, it gives some credence to my belief that Stephen Harper’s recent lowering of the national GST rate to 6% is basically a hidden benefit to the rich. We have a system of GST-rebates (tied to the income tax system) in place already. Cutting 1% of the national sales tax just puts a disproportionately large amount of money back into the pockets of those who spend the most on taxable goods (ie: the rich).

For the record, I’m a much further to the left (both economically and morally) than most. This liberal gives the idea a thumbs-up and hopes that we might see it in Canada one day.

BTW, there’s a Fairtax blog with some Fairtax-related news.