Dave70968, I am glad you posted the links. I knew I had seen them a couple of days ago. I know there are other factors that go into a fair tax, but I just wanted to show a topside answer as to why it is such a huge tax break to high income individuals.
Your high income perspective is also skewed in that you are ass|u|ming that the invested part never gets spent and as my grandmother always said "Ernie (my grandfather), you can't take it with you."
And that none of the 3 million is capital gains.
Actually, if they do away with the estate tax there is a good chance this money will never be spent. Instead it will be passed on and on, which would ultimately continue to reduce the future tax amounts.
That is an important part. The Bush era tax cuts also significantly are advantageous to those with large amounts of qualifed dividends and capital gains taxes. Those are set to expire and this same income will be subject to an additional 3.8% depending on the amount in the future.
Doesn't matter because the cash register at the store or online has no idea if the money making the purchase came from capital gains or not, it all becomes subject to the Fair Tax. That's why it's necessary to do away with the current tax code that contain such manipulation and make all income equal. Of course, the IRS goes away, too.
You didn't understand my post, and that's ok.
Or any other deductions to quell their effective tax rate.
That is why in my scenario I used effective tax rate. Obviously there are many factors that could determine the effective rate. No matter what tax structure/system that is in place there will always those trying to get away with not paying taxes. Tax planning will be a key, and as a CPA, it keeps me employed.
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