Keep Your Entire Paycheck. Make April 15 Just Another Day

Tuesday, April 19, 2005

The Best Plan? - Absolutely

Federal Reserve Chairman Alan Greenspan said March 3 that some form of a consumption tax -- such as a national sales tax -- could spur greater economic growth, but he cautioned that the government would face significant problems making the transition to such a system.

President Bush, on more than one occasion after his reelection, has announced his support for overhauling the current tax code. He didn’t say it specifically, but the FairTax is the very best way to do just that. Mr. Greenspan, President Bush, and many article writers have mentioned a national retail sales tax. However, the FairTax is the only sales tax legislation currently before the Congress. A sales tax, like many people see it would be regressive. However, the FairTax is a form of the national retail sales tax that is nowhere near regressive and is absolutely the best way to reform our current tax system.

The Chairman’s comments about the transition are to be commended. Nonetheless, there is no way the fear of change should discourage our leaders from doing the right thing.

The current tax code has been grossly manipulated to reward elite interests and compliance has become increasingly difficult and expensive. The current tax system is incomprehensible. It is beyond reform. It simply has to go. The federal income tax is extremely unfair to wage earning Americans and the average citizen. Your voice to your leaders has become increasingly imperative.

This government appears far more anxious to control citizens than to protect them. The more laws, the more uncertainty that permeates private lives and the more difficult it becomes for citizens to keep their affairs in order. Between 1981 and 1993 more than 9,000 subsections of the tax code were amended. In June 1997, the National Commission on Reform of the IRS said the code's complexity placed a severe burden on citizens.

The FairTax Act, a bipartisan bill sponsored by John Linder (R-GA) and Collin Peterson (D-MN) would remove the burden of the income tax and other federal income-based taxes.

The FairTax is fair to all Americans, and simple to understand. The FairTax bill represents an idea whose time has come. National polls show that more than two-thirds of Americans want fundamental tax reform, and we need support for the FairTax from the leaders of our country.

Here are the key facts about the FairTax:

1. All Federal income taxes are eliminated, both for individuals and corporations.

2. All FICA taxes are eliminated, both for individuals and corporations.

These first two facts mean that there will be a dramatic reduction in the overall price level of all goods and services. The currently institutionalized cost of taxes that is contained in all prices will be eliminated, and competition will force the prices down.

3. All Federal inheritance taxes are eliminated. What you earn and build during your lifetime will not be confiscated by the government.

4. The IRS is eliminated. As with items 1 and 2, the institutionalized cost of compliance, both for corporations and individuals, will be eliminated. The IRS has a "corporate culture" of its own that puts it into adversarial position with every citizen. It cannot be reformed or transformed. It must be eliminated.

5. The Federal government raises its revenue through a tax on retail sales of all new goods and all services to individuals, estimated at 23%. The individual gets to decide, through lifestyle purchases, how, where and when to pay taxes. The "rich" cannot avoid taxation through sheltering. Every citizen gets to experience the cost of government in a direct, visible way, the share of which increases as the level of purchases increases.

6. There is a monthly rebate check to every family for taxes paid on purchases up to the poverty level. This offsets any taxes paid by the poorest among us.

According to the Tax Foundation, Americans spend 10.2 billion man-hours filling in forms and paying their taxes each year. That amounts to almost 5.1 million full-time workers doing nothing but tracking income and preparing tax returns. Most small businesses spend seven times more to prepare their taxes than they actually pay in taxes. Nationwide, the cost of compliance with the tax system is upward of $250 billion per year.

While a 23 percent retail sales tax appears high at first, consider the following facts. Most individuals already pay 15.3 percent of every dollar earned in payroll taxes for Social Security and Medicare. However, many of us pay a lot more. Middle-income workers must forgo 27 percent of their paychecks to pay federal income taxes. When you add state and local taxes, the average American loses more than 42 percent of his or her paycheck in taxes.

The effect is compounded because corporate and payroll taxes affect the cost of every purchase we make, from a hamburger to a house to a hotel room. Dale Jorgenson, former chairman of the Harvard University economics department, estimates that under the FairTax, prices will fall 20 percent to 25 percent in the first year after adoption and may be reduced further as companies reflect decreased compliance costs.

In order to ensure that low-income individuals are not unduly burdened, the FairTax gives them relief by simply "untaxing" them. Every household will receive a monthly rebate equal to the tax on spending up to the federal poverty level, as determined by the government.

We are losing jobs because of our tax system. The tax on corporations causes the prices of our goods and services to go so high that we can no longer compete in the international marketplace. We all want products that are less expensive. Countries with lower corporate tax rates can make items at a lower cost.

One thing is incorrect about what Mr. Greenspan said, and that is that a consumption tax and income tax should be used together. That is absolutely not true, and would have detrimental consequences for our country. We need to get rid of the income tax completely to prevent further atrocities. By letting an income tax stay, we would still be allowing unlimited tax increases and spending by the government.

I recommend that you become fully informed about the FairTax bill through several websites, including www.myfairtax.org, www.scrapthecode.com, http://linder.house.gov, and, most importantly, the Americans for Fair Taxation's website at www.fairtax.org. I also encourage you to urge the congress and senate to support the FairTax bill, as it is in everybody’s very best interest. However, you may not know that the Congressman from Kentucky’s 4th District, Mr. Geoff Davis cosponsored the FairTax bill in February, and then withdrew his support in March. Let him know what you think about his lack of support for the bill. He can be reached at 1405 Greenup Avenue, Suite 236, Ashland, KY 41101, 606-324-9898, or by fax at 606-325-9866.

1 Comments:

Blogger CHASBAR said...

I'm excited about the Growth aspect of the Fairtax. Our economy presently consider 4% annual growth as exceptional. The projected 10% first year growth will boggle the mind and increase paychecks.

Wednesday, April 20, 2005 8:36:00 AM

 

Post a Comment

<< Home