A person inquired about this, and I suppose I can respond to educate.

A Flat Tax would be a sales tax or income tax based taxation policy. It would apply evenly to all regardless of income level.

The FAIR Tax would be a sales tax fixed at a certain percentage where everyone in the United States was cut a check for a nominal amount, such as $4000 in cash per year.

The Flat Tax would stimulate the economy via simplicity and fairness. For instance there is a presumption that every millionaire and billionaire has a vault like Scrooge McDuck where their money sits doing nothing for the economy, nothing for anyone except as padding for the rich.

This presumption is so very wrong. What the Millionaires and Billionaires have is something totally different.

But first I need to explain wealth versus cash.

Wealth is the total sum value of all property you own. If you have a car you have 'wealth'. If you have a laptop you have wealth. If you own a house you have wealth. An IRA, 401k, Anuity, and so forth are also considered wealth until you get cash in hand. Art is wealth.

Cash is actual legal tender that can be liquidated to purchase something.

The Millionaires and Billionaires have wealth as a vast majority of their assets. Their yacht, their Rolls Royce, their Mansion is all wealth. So is much of their stocks, bonds, and more.  Though again until they are cashed.

Income pays their bills just the same. If they have excess they dont build a vault and jump in the coins they collect. They reinvest it into new money making ventures or into new wealth.

A millionaire orders a painting. This painting pays a local artist. The millionaire gains wealth but loses cash. A billionaire invests into the next Google, Ford, or Apple. He gains wealth and the new company gains cash.

That wealth can be changed into cash with effort is not withstanding. There is not enough cash in the world to purchase all the businesses of the world. The wealthy, a bad name in some regions, produce jobs via spending of cash and creating wealth. If they are truly successful then they make much more wealth than their cash cost them, or cash and wealth than their cash cost them.

An example of a very successful company is Apple Computers. Their products are worth more than the labor used to create them, and the company itself is worth more than small sum as well.

Apples CEO does not have a tower filled with gold coins. Instead he has investments in Apple and other companies, a house (or ten, who cares), some cars, some clothes, some equipment, and so forth. Yet those assets did not magically appear and his cash disappear to a fairy land. Instead he paid for items which is in a sense paying for the labor to create the items, market the items and other such labor type activities, and some profit to those who made it as well. He pays his barber, he pays his tailor, he pays his other employees... They dont work for free.

And then some people try to say they dont deserve the money, that they cannot possibly have earned it. But I ask this question to those. Can Steve Jobs not have earned his salary? He turned Apple around from a fading 2nd rate company to one of the leading tech companies across all the different spectrums. He has earned the investors in his company (the holders of stock) many many more dollars, even after his share, than they would have earned without him.

Without Steve Jobs there would be no IMac, no IPod, no IPad, and no IPhone. Without Steve Jobs we would all have less total options. Has he "Earned" his billions?

Yes some just sit and do almost nothing, with a family name to help them along. The Heinz family is an example of this. How has Teresa Heinz helped increase the value of her company for stockholders? This is where supposedly the Stock Market would reflect such and punish her. Oh wait... it has. Apple stocks are worth ever so more than any Heinz stock ever would be.

So the presumption of a flat tax is that millionaires and billionaires always invest money or spend it, and that most of them could not open a check book and write a million dollar check on the spot.... because most of their value at any time is in wealth.

Their spending and investing provides for jobs. That they have to fight to maintain their spot in the market (Commodore computers anyone?) means that they can lose wealth if they stop spending and investing. Therefore giving them more of their cash means they provide more jobs.

A Fair tax would still do the same, but also give a little something to everyone that dramatically helps the poor but in effect does nothing for the rich.

To whit I will also provide that a very unfair taxation scheme (read one where they cannot possibly profit) makes millionaires and billionaires hold onto assets and cash and stop creating new ventures and jobs. After all if there will be no profit, if there can be no gain, then no one else can possibly grow to compete with them, and they need not try hard to innovate or such, but can instead coast.

A difficult regulatory environment, and a run amok lawsuit happy nation means more companies need to keep more cash on hand to cover issues that may come up. Obama wants to be "Green" which means he may pass via the EPA a new standard which requires them to replace all AC units in their businesses in less than a year. This takes a LOT of cash to do so. So would requiring wiring every building with firewire and increasing the capacity of the Internet in less than a year.

That sort of crap costs so much money that companies, seeing a big spender, a guy who makes new standards start almost immediately, and with painful costs to those standards, a guy who seeks innovative ways to make CEO's and their companies squirm.... makes them save up as much cash as they can to cover all eventualities.

This is why we are in a world wide slump, and a National Depression. These companies must be ready to jump when he says so, and jump in a hard fiscal manner. This impedes them from growing, competing, or hiring.

An example of such tampering is the Fairness Doctrine. If every radio station were to have to hire a Liberal (but not NPR hire a conservative mind you) then there would be competition for better liberals who can replace stars who held the time before (please if they could provide the audience then they would still be on the air, so this is not an easy thing). This means they need to have cash on hand for hiring such liberals, as well as cash on hand to cover potential losses for a while until they can stabilize themselves.

This means radio stations around the nation let go a number of DJ's they saw as useful, but not necessary. Obama's own radicalism cost hundreds of radio DJ's their jobs just with a threat without full follow through.

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TL;DR

Your a puppet and always will be a slave to your masters. Read it, understand it. My heart and soul especially went into the last half. a better explanation of why your policies self destruct there cannot be from almost anyone in this world. READ IT!