The FairTax and Investment
The FairTax proposal not only eliminates all income and payroll taxes in favor if a 23% national retail sales tax, it also eliminates all taxes on capital gains, dividends and interest. What this means is that if you buy a stock at $10 and sell it at $15 you will reap all of the $5 in profit, and may reinvest it without any tax. Only when you choose to spend that $5 of profit (on a new good or service) will you be taxed on that profit.
There are a lot of folks who will look at this and see a big tax break for the rich. Think of it this way though: capital investment is what creates higher paying jobs. If an investor lends a business man $100,000 to buy a bulldozer, he can afford to pay that bulldozer driver a lot more than he can afford to pay someone moving earth for him with a shovel. This is because one man driving a bulldozer can do as much in a day as 10 guys with shovels can in a week. If you tax the interest he pays the investor, then it takes longer for the investor to be able to lend to another business man to buy another bulldozer to create another high paying job. Taxing investment income that is reinvested is purely a means of slowing the creation of higher paying jobs. Now this is NOT to say that the investor shouldn't pay his Fair Share(tm). But the FairTax moves his fair share to the point at which he turns those profits to selfish ends by consuming goods and services with them.
After all, if two investors both make $100,000 dollars in the market and one reinvests it all in creating more highing paying jobs for others, and the other buys a couple of Rolexes and a Mercedes, does it really make sense to take the same $40,000 cut from both of them? Isn't that punishing the virtuous behavior of investing in making a more productive economy in the same way as punishing hedonistic consumption?
The FairTax does not allow the rich (or anyone else) to escape taxation, all it does is tax you for what you consume, not what you contribute. Investment is a contribution to society, and thus the profits from investment are not taxed until they are used for consumption.