Keep Your Entire Paycheck. Make April 15 Just Another Day

Monday, May 09, 2005

ZERO Income tax and Zero Payroll Tax

I originaly wrote this op-ed in late January after Stephen Moore wrote his article on the flat tax. Considering that Stephen will also be testiyfying along with Steve Forbes on the Flat Tax ( tired, weak and anemic solution) to the President's tax reform panel, I thought it would be good to share it again.. I hope you will enjoy the car analogy and remember the Fair Tax is a fullly researched and documented package that has already been put into full legislative form and is waiting in the garage ready to rev up our economy and give every American Family a raise in take home pay.

Merrill Bender is an author of several articles on the ten-fold economic benefits of the Fair Tax Legislative package and writes on his tax blogger site - Tax Reform "Fair To All"

The answer to Stephen Moore's January article titled "How much Tax would you like to Pay?", is ZERO Income tax and ZERO payroll tax. That is actually what will happen under an up to date and ready to go Legislative Package- HR 25/ S25 commonly called the Fair Tax-

The FairTax has a ten-fold economic benefit to the American economy that far surpasses the limited benefits for a Flat Tax that Mr. Moore admits he rolled out over 8 years ago. Mr. Moore has resurrected from the auto junk yard of tax reform a car that won't run and is easier for special interests to hijack and steal later on. He is trying to inflate the tires but the engine in this car will not provide enough energy to rev up our economy or go the distance to create quality jobs.

Mr. Moore's car only eliminates about half of the $225 to $250 billion dollars in tax compliance costs where the Fair Tax eliminates a much stronger 80 to 90% of compliance costs. Mr. Moore leaves 90% of the cumbersome IRS tax code because even under a Flat tax, 90% of the code determines the definitions and calculations of the income to be taxed.

He also leaves in place a tax code that is more likely to be corrupted by lobbyists and special interests in the future. Lobbyists who will continue to manipulate the code to rob Peter to pay Paul. Under the Lemon Law he should return this car to the used car lot he got it from. American families want a new tax reform car that is safe and well tested for the economic roads of a new century. Two of our largest states operate their state budgets on a sales tax with no income tax, Florida and Texas.

The Fair Tax is " Family Friendly Tax Reform " whose time has come.The Fair Tax package eliminates all Personal and Business income taxes, payroll taxes, AMT, and Death taxes. Due to these eliminations, prices will drop 22 to 25% and then the Fair Tax replaces them all with a revenue neutral federal retail sales tax on new products and services. Consumers will pay about the same as they do now.

However, exports are not taxed thus the Fair Tax will provide a boom to American manufacturing because American products will be 22% lower in price for sale overseas. We can't compete with low wage countries but we can compete with lower taxes on business, products and services made in America.

The Fair Tax Legislative package has been well researched and is well supported in the research section of their web site - Though Mr. Moore uses old information from Dr. Dale Jorgensen of Harvard University in his article, he must be unaware of the up to date information and research quoted from Dr. Jorgensen that supports the Fair Tax Legislative package. Dr. Jorgensen calculates a 10.5% growth in the economy in the first year of the Fair Tax.The Tax Reform debate and the research is far beyond the simple discussion of Flat Tax, VAT or National Sales Tax, though some will still go through the motions.

The Fair Tax is much more than a National Sales Tax, it has additional provisions that result in prices dropping 22 to 25% before you add in their NST. Consumers will pay about the same for products and services as they did before but take home a much bigger paycheck that is 100% free of federal income or payroll tax. In addition, the Fair Tax has provisions to maintain Progressivity by providing a prebate of the sales tax up to the poverty line to every family. For a family of 4 they receive $479/m for a Couple they receive $357/m. An Average family of 4 making $50,000/yr will have more than $7500 in additional take home pay and after tax purchasing power under the Fair Tax there by making it both progressive and fair. The more you spend the higher your effective tax rate. Supporters say, "Those that Know the Facts Love the Fair Tax". More importantly it is the only comprehensive tax reform proposal that eliminates the income tax and the more regressive payroll tax.

The Fair Tax has just been re-introduced from the 108th Congress to the 109th Congress as bills, HR 25 and S25. The Fair Tax had 55 Co-Sponsors in the last Congress and plans to have over 100 in the new Congress. Dennis Hastert and Tom Delay have both indicated support. Congressman John Linder of Georgia was the original sponsor of the Fair Tax bill and has just been appointed by the Speaker to the important House Ways & Means Committee and its tax writing subcommittee.

The Fair Tax meets all the guidelines set down by President Bush for his tax reform panel including promoting home ownership and supporting charities. In addition, the Fair Tax also meets the 3 standards set by House Minority Leader, Nancy Pelosi in her open letter to the President on Tax Reform sent 12/15/04; 1) Tax Simplification; 2)Tax Fairness(Progressivity); 3) Revenue neutral.

This Car is waiting in the garage gassed up and ready to go. Democrats and Republicans need to climb on board and drive our economy in a positive and new direction with the Fair Tax Legislative package. The Fair Tax has been built from the ground up, it has been test-driven and shared with many researchers, economists, average Americans and American Organizations. Supporters include 560,000 members of Americans for Fair Taxation, 350,000 members of The National Tax Payer's Union, and is outlined as a legislative agenda item of the 6 million member American Federation of Farm Bureaus.

The Fair Tax has been fined tuned and polished for the 21st century. It is an economic engine waiting to rev up our economy and send us down the road better able to compete fairly in the global market place and to grow a financially stronger "ownership society" at home.


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