The Fair Tax: The Great Equalizer

When Sunnye invited me to post on this blog, I wasn’t sure I was up to her calibre of writing. But decided that all I had to do was speak from my heart about something I am passionate about: The Fair Tax.

I began looking through the 50 Reasons I Support the Fair Tax and decided that #26 is well worth writing about and brings in two of my other passions, Immigration reform and Social Security reform. But, I promise I will stay off my soapbox and not speak to the others except as it applies to the Fair Tax.

There are approximately 290 million Americans. I say approximately because there are births and deaths, people being hired and fired, and people emigrating to and immigrating from all corners of the world every day. Of those approximately 290 million Americans, only about 110 million workers fund government programs such as Social Security and Medicare.

There is something in the vicinity of 51 million tourists who visit the US. While they are visiting our fair country, they spend money. Hotels, car rentals, housing, food, souvenirs, clothing, tickets to theme parks, museums, sporting events, and so on. Pretty much the same things American citizens spend money on everyday. The main difference is that tourists don’t live here and so don’t generally contribute to funding the American government through payroll deductions.

Add to the millions of tourists visiting the US, the tens of thousands of people who live “below” the radar of our current tax code by not having traditional jobs where taxes are taken from their paychecks. The group that you would probably think of first is the criminal element. Burglars, drug dealers, car thieves, muggers, identity thieves, and prostitutes would pay their “fair” share simply by making a purchase at their local Wal-Mart or Circuit City. You don’t suppose that drug dealers file an income tax return do you? And if they do, I’m reasonably sure that they wouldn’t report their full income. By instituting the Fair Tax, every time a drug dealer bought a new car, jewelry, clothing, food, he (or she) would pay as much tax as you, the do.

How about the day laborers who are so often illegal immigrants? They are usually paid in cash, often under the table and no taxes are deducted from their wages. Like the criminals in the previous example, cash-paid day laborers would pay their “fair” share of the tax burden when they purchased food, goods, or services.

Under the Fair Tax, it is the consumer who decides how much tax they will pay. Everyone will pay the same rate. There will be no loopholes or deductions that are available to the wealthier members of society; they will pay the same rate as the couple struggling to get by on minimum wage. If Sam Gotrocks wants to buy a new car, he will be taxed as the same rate as Joe Lunchbox who buys the economy car. If Joe wants to buy a “used” car, he will pay no tax at all. The original owner will have paid the tax for him. Imagine buying a car only a year or so old and not paying taxes on it.

Talk about an equalizer! The Fair Tax is just that! It doesn’t discriminate. The Fair Tax doesn’t care whether you are wealthy or poor, black or white, legal or illegal, working or not. Everyone pays the same tax rate.

Here's a link to the Fair Tax Act petition. From there, you can review the site and get more information.

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GREENSPAN WARNS ON DEFICITS

By Neal Boortz

Reserve Chairman Alan Greenspan was up on the Hill yesterday testifying in front of the Senate Budget Committee. In his remarks, he voiced his concern about the budget deficit. For those of you in or out of government schools, the budget deficit is the amount of money the United States overspends every year.

At any rate, Greenspan is concerned. He says if the deficits go unchecked, they "would cause the economy to stagnate or worse." The Fed Chief also said "The federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years." So now we know the problem....but what is ths solution?

Greenspan's remarks will be used to advocate raising taxes. Naturally, since we have a deficit, we need to get the money from some place. Right? Wrong. The entire problem with the deficit has nothing to do with taxation. The problem is excessive government spending. Think of it in terms of your family...if you spend more money than you take in, what do you do? You cut spending. But you're not the government.

Politicians in both parties...and Republicans in particular, love to spend money. The size of the federal government has doubled in the last 10 years under Republican Congressional control. President Bush is the biggest spender in the history of the Oval Office. Spending is being increased, not cut. And it's not likely to ever happen. The Democrats like to tax and spend, the Republicans like to borrow and spend.

By the way, there is a way out of this. If we ditched the income tax altogether and instituted the FairTax, revenues would likely increase because the economy would be unshackled and no one could avoid paying it.

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More Than 50 Reasons You'll Love FairTax

INDIVIDUALS AND FAMILIES

1. Keep ALL of your paycheck.
FairTax replaces the entire federal income and Social Security tax systems, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes.
2. No fear the IRS will come after you for making a mistake – income tax is gone.
3. FairTax funds the US government at current levels, including social security and medicare.
4. You get a rebate at the beginning of each month ($178 per social security card owner) so that you pay no tax up to the first $24,000.00 you spend.
5. FairTax is a consumption tax. You pay tax only of purchases of new items and services.
6. The poor pay no income tax, thanks to the “prebate.”
7. Pay no tax at all on pre-owned items.
8. Reduces prices 20% to 30% by removing taxes passed along to consumers by businesses: 7.65% for earnings taxes, corporate and other taxes businesses pay. WalMart has promised to cut prices when the FairTax goes into effect.
9. Families can spend or save – or both. Their choice.
a. The average family making $50,000.00 a year will have $7,500.00 more a year in discretionary income.
10. You can set up any kind of savings or investment retirement account without worrying about taxes or government rules.
11. College tuition becomes a tax-free expenditure from tax-free income.
12. No more paying tax preparers, spending time collecting data to comply with tax laws. (Americans spend an estimated $250 - $600 BILLION annually on compliance efforts. That’s about $1,000.00 to $2,000.00 annually for every man, woman and child in the US since businesses embed their tax costs into prices.
13. It’s simple, easy and predictable, as opposed to the current 60,044 pages of tax code.
14. Never have to float a loan to pay your tax bill.
15. The more you earn, the more money you have in your pocket.
16. Lower income workers can become homeowners easier than ever because savings are tax free and therefore accumulate faster.
17. The income tax exports our jobs, rather than our products. The FairTax brings jobs home.
18. Mortgage interest rates will come down approximately 2%, creating a real estate boom and allowing homeowners to refinance at lower rates.
19. No death tax. Farms and businesses can be passed down through families without penalty.
20. Families can provide financial assistance to each other without tax penalties.
21. It encourages families to buy health insurance and puts the health-care system on a direct pay basis. Getting rid of third party pay brings health costs down.
22. Individuals and businesses can give freely to churches and charities without worrying about exceeding an allowed limit.
23. It makes April 15 just another day.
24. Eliminates the regressive payroll tax. Now everyone is taxed a minimum of 7.65% on our first dollar of wages up to $90,000.00 (FICA cap).


SOCIAL SECURITY AND MEDICARE

25. It funds Social Security and Medicare at a level equal to or more than the present.
26. All 290 million Americans and 51 million foreign tourists find Social Security and Medicare with their purchases. Today only 110 million workers fund these programs via deductions from their paychecks.
27. The wealthiest Americans, now exempt from FICA taxes, will now contribute to social security even if most of their income is from investments.

THE ECONOMY

28. FairTax makes the United States the only country in the world that doesn’t tax production.
29. Eliminating the capital gains tax increases business investing.
30. Business owners can plan better since they no longer have to consider tax implications.
31. By eliminating the $3 compliance cost per $1 in payroll and income taxes that business owners now have to pay, it makes it possible for business owners to raise salaries and/or invest more in their companies.
32. American products become more competitive overseas.
33. American products become more competitive with imported goods.
34. Encourages foreign investment in the US. America will be the most attractive tax-free haven in the world for business.
35. US companies and individuals now operating in foreign countries will find it cheaper and more productive to return to the US.
36. Those who hold taxable high-interest bonds will enjoy a windfall profit, since those bonds will no longer be taxed.
37. Federal Reserve rates will be based on consumption rather than future earning estimates, stabilizing inflation prevention.
38. FairTax reduces production costs for farmers and other subsidized businesses, leading to a reduction of subsidies (and Federal controls) and a reduction in the Federal budget.
39. Tax preparers and accountants can move into more productive financial fields in an expanding economy where they can add to the standard of living and earn more money.

CHURCHES AND CHARITIES

40. Churches and non-profits no longer have the expense of filing tax returns and paying for social security and medicare for employees.
41. Churches and charities regain their First Amendment rights to engage in free speech without fear of losing their tax-free status.
42. FairTax protects Americans from IRS unreasonable searches and seizures.
43. It restores the Fifth Amendment rights, guarantees the right to due process by negating the need for it.
44. FairTax restores individual privacy. The government no longer knows where you work, what you earn and what you are doing with your income.
45. No income tax means you don’t have to prove your innocence from accusations of the IRS that you misinterpreted tax law.
46. The government no longer requires a marriage clarification for tax purposes.
47. It eliminates the need for courts to decide which divorced parent gets to take the tax deduction for children.
48. State budget revenues increase because states, counties, school districts and municipalities no longer have to pay FICA taxes.
49. Eliminates administrative costs paid by states when they collect state sales taxes because states can piggyback their tax collection onto the national tax collection and be compensated ¼% in an administrative cost give-back. Retailers also get a kickback for collecting FairTax.
50. FairTax eliminates campaign donations for “tax favors.”
51. Eliminates Congressional wrangling over tax cuts, the tax code, etc. giving legislators more time to solve pressing issues.
52. FairTax saves 300.000 trees a year. The IRS sends out 8 billion pages of forms and instructions annually.
53. Since it taxes only new items, FairTax encourages the purchase of pre-owned taxes, cars, clothes, furniture, homes, etc. Recycling is environmentally friendly.


Thanks to Kenneth J. Van Dellen and friends, authors of 50 Reasons For The FairTax

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Mortgage Deduction Maximized Under the Fair Tax

By Merrill Bender

In the arena of tax policy and tax reform the income tax deductions for Mortgage interest seems to be cast in stone and never to be touched. This is the one tax deduction every homeowner knows to include in his tax return and a benefit that the President has asked his tax reform panel to keep. There is only one tax reform package that meets this goal and then maximizes it - The Fair Tax Legislative package.

The actual benefit has diminished under the archaic income tax code. As income tax brackets have lowered and interest rates have lowered so has the amount of dollars you get back from your mortgage interest deduction. The Tax payer in a 25% federal tax bracket faithfully files a return on or before April 15th to get a deduction which only gives him back $250 of his own money back per $1,000 spent in Mortgage interest. When upper tax brackets used to be 50% to 70 % Americans would get back even more. However, the 7.65% Americans pay out in payroll tax provides no deductibility or return at all.

In addition, American families still have to pay the mortgage principal out of after tax dollars. For many middle class Americans that includes a 25% federal income tax and a 7.65% payroll tax for a total federal tax bite of 32.65%. On a $100,000 mortgage at 6% a family might get back $1500 with a mortgage interest deduction but you get no deduction for the principal paid. You pay that with after tax dollars.

There is a Tax Reform package in Congress that would maximize the Mortgage deduction in a totally new way with added benefits for families and home ownership. Under the Fair Tax, American workers get 100% of their paychecks with no payroll tax or income tax taken out. The 32.65% they had subtracted each week is now in their pockets to help pay the principal on their mortgage or any other important family needs. You end up with the income tax equivalent of a 100% deduction of principal and interest by replacing the income tax and the IRS with the Fair Tax.

The Fair Tax reform package is well documented and researched on the Fair Tax website http://www.fairtax.org/. It has been reintroduced in the 109th Congress as HR25 and S25. The Fair Tax legislative package first eliminates the current income tax system on American families and American business. Elimination of hidden business taxes will first cause prices to drop 22 to 25%. The Fair Tax than adds in a federal retail sales tax of 30% (equivalent to income tax of 23%). American consumers will pay about the same as they did before but take home a much larger paycheck. The Fair Tax is revenue neutral, bringing in the same revenue as current income taxes, Social Security taxes and Medicare taxes and estimated to grow the Economy 10.5% in its first year.

If you want tax reform that gives you more take home pay and a maximized Mortgage deduction for interest and principal than call your Congressmen and Senators and tell them you support the Fair Tax Legislative package HR 25/ S25. For more information visit http://www.fairtax.org/ and read the FAQ section.

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One Reason For The FairTax

"The income tax is bad because it has robbed you and me of the guarantee of privacy and the respect for our property that were given to us in Article IV of the Bill of Rights. This invasion is absolute and complete as far as the amount of tax that can be assessed is concerned. Please remember that under the Sixteenth Amendment, Congress can take 100% of our income anytime it wants to. As a matter of fact, right now it is imposing a tax as high as 91%. This is downright confiscation and cannot be defended on any other grounds.

"The income tax is bad because it was conceived in class hatred, is an instrument of vengeance and plays right into the hands of the communists. It employs the vicious communist principle of taking from each according to his accumulation of the fruits of his labor and giving to others according to their needs, regardless of whether those needs are the result of indolence or lack of pride, self-respect, personal dignity or other attributes of men." T Coleman Andrews, Commissioner of the Internal Revenue Service from 1953 to 1955

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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.

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Tell The President's Panel Your Tax Plan

DEADLINE APPROACHING: PROPOSALS TO REFORM THE TAX CODE DUE APRIL 29TH

Today the President's Advisory Panel on Federal Tax Reform, reminded interested parties that the deadline to submit ideas for reforming the tax code is fast approaching. Proposals should be submitted by April 29, 2005.
Guidelines for proposals are attached.

"At our seven public meetings that were held all over the country, we learned about the dismal condition of our tax code," stated Senator Connie Mack, Chairman of the President's Advisory Panel on Federal Tax Reform. "We
are now reviewing specific proposals for reform. We look forward to continuing to receive ideas and input from across the country. We will also hold public meetings in May to discuss options and alternatives that would
make our tax system simpler, fairer, and more productive."

"It is important that we hear from Americans about the kind of tax system they want," said Senator John Breaux, Vice-Chairman of the Panel. "Now is the time to send in your ideas to improve our tax system."

This is the Panel's second specific request for comments. The Panel received thousands of comments describing complexities and burdens, unfair aspects and distortions in the current tax system, in response to its first request.

Information on how to submit comments as well as details on the format for comments are available at www.taxreformpanel.gov/contact/. Comments submitted in connection with this second request should be received by the Panel no later than April 29, 2005. All comments submitted will be made available to the public.

The President's Advisory Panel on Federal Tax Reform was established by President Bush on January 7, 2005. President Bush has charged the bipartisan panel with recommending reforms to the tax code that will make
the U.S. tax system simpler, fairer and more growth oriented.

Further details are available on the Panel's website at www.taxreformpanel.gov.

###

Guidelines for Tax Reform Proposals

The Advisory Panel will recommend to the Secretary of the Treasury revenue-neutral policy options for reforming the tax code.

As directed by the President, these options should:
Ø simplify the tax laws
Ø share the burdens and benefits of the Federal tax structure in an appropriately progressive manner while recognizing the importance of homeownership and charity in American society
Ø promote long-run economic growth and job creation by encouraging work effort, saving, and investment to strengthen the competitiveness of the
United States in the global marketplace

The Advisory Panel is soliciting comments from interested parties regarding specific proposals to reform the tax code. Comments may include proposalsto replace or comprehensively reform the existing tax system or proposals to reform particular aspects or elements of the current tax code. To assist the Advisory Panel in evaluating and comparing specific proposals for reform, supporters should provide the following information:

I. Description of Proposal. Proposals for comprehensive reform should include a description of the design of the proposal's components, including the following:

Ø the tax base (income, consumption, hybrid)
Ø exemptions, deductions, credits and exclusions
Ø tax rate(s)
Ø distribution of the tax burden (including provisions for relief for
low-income individuals)
Ø treatment of charitable giving
Ø treatment of home ownership
Ø collection method(s) and
Ø treatment of businesses

Proposals to reform particular aspects or elements of the current code should include a specific description of the proposed changes and an explanation of which components of our tax system would be altered.

II. Impact of Proposal Relative to Current System. The description of the tax reform proposal should include an explanation of how it compares to our existing system in terms of the following factors:

Ø simplicity (including transparency and stability)
Ø fairness
Ø economic growth and competitiveness
Ø compliance and administration costs

III. Transition, Tradeoffs and Special Issues. The description of the tax reform proposal should include an explanation of any special issues or considerations, such as the tradeoffs that would be required, favorable/unfavorable treatment of particular industries or sectors within the economy, or the impact of transition from our current system to the proposed system.

As noted above, all options recommended by the Advisory Panel must be revenue neutral. The Advisory Panel invites commentators to provide information regarding the expected revenue impact of the proposal and, if possible, the assumptions made in estimating the revenue impact.

Proposal descriptions for comprehensive reform should be limited to 10 pages
(excluding a one-page summary) of double-spaced written text in 12 point font. Proposals for reform of particular aspects or elements of the current tax code should be limited to 5 pages (excluding a one-page summary).

Submissions should be received by Friday, April 29, 2005.

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FairTax To Speak To President's Tax Reform Panel

From Genie at Headquarters:

We will have a chance to speak and make our case in front of the Presidents tax panel on May 11th.

In DC.

Date is now confirmed.

It will be Leo Linbeck (Chairman of the board) representing the FairTax. If you have not had the chance to hear him speak before, you are in for a treat!

There may be other groups presenting the case on their plan but we do not know who yet.

All grassroots members of FairTax are encouraged to attend.

For details and gathering information please contact heather@fairtax.org or call her at 1-800-FAIRTAX.

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FairTax = No Trade Deficit

The FairTax is the answer to this problem. The faster we get it passed, the quicker the problem will be solved.

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON - The U.S. trade deficit, exacerbated by surging imports of oil and textiles, soared to an all-time high of $61.04 billion in February.

The Commerce Department said Tuesday that the February imbalance was up 4.3 percent from a $58.5 billion trade gap in January as a small $50 million rise in U.S. exports of goods and services was swamped by a $2.58 billion increase in imports.

The surging trade deficit is leading to an increase in protectionist pressures as American textile and clothing manufacturers are lobbying the administration to limit imports of Chinese textile and clothing goods to ward off a flood of products now that global quotas have expired.

For February, imports of textiles and clothing from China rose by 9.8 percent even though America's overall trade gap with China actually narrowed to $13.9 billion, down by 9.2 percent from a January deficit of $15.3 billion. The improvement reflected an increase in U.S. exports to China and declines in other import categories outside of
textiles.

For the first two months of this year, the trade deficit is running at an annual rate of $717.2 billion, a full $100 billion above the record imbalance of $617.1 billion set for all of 2004.

Trade deficits of this magnitude have raised worries among economists about America's ability to continue to attract the foreign financing needed to cover the shortfall between exports and imports. If foreigners decided to hold fewer dollar-denominated investments such as stocks and bonds, it could trigger steep declines in U.S. stock prices and a sharp increase in interest rates.

Critics point to the soaring deficits as evidence that President Bush's free trade policies are not working and have instead
contributed to the loss of 3 million American manufacturing jobs since 2000.

The Bush administration argues that the deficit primarily reflects the fact that the U.S. economy has been growing at a much faster pace than the economies of its major trading partners, pushing up imports while dampening demand for U.S. exports. Treasury Secretary John Snow was expected to use a Saturday meeting of finance officials from the
Group of Seven major industrial countries to once again lobby for Europe and Japan to pursue more growth-oriented policies.

The U.S. dollar has been declining for three years, a fact that should help narrow the trade deficit by making imports more expensive to American consumers while making U.S. exports cheaper. However, economists say the dollar needs to fall further to deal with the widening trade deficit, and they are predicting a further increase in the trade gap this year.

The record February deficit of $61.04 billion surpassed the old record of $59.4 billion set last November.

Imports of goods and services rose by 1.6 percent to an all-time high of $161.5 billion.

Demand for foreign petroleum products shot up 10.3 percent to $18.2 billion, the second highest level on record, surpassed only by $19.6 billion in imports of petroleum last November.

The February increase reflected higher prices as crude oil climbed to $36.85 per barrel, compared to $35.25 in January, offsetting a drop in the volume of oil imports. Analysts said America's foreign oil bill is likely to climb even further in months ahead, reflecting further increases in global oil prices.

Exports were up by $50 million to a record $100.48 billion in February, reflecting increases in shipments of drilling and oilfield equipment, civilian aircraft and pharmaceutical products. These gains offset declines in sales of U.S.-made cars and auto parts and food.

The administration, at the urging of U.S. textile and clothing manufacturers, has begun investigations into whether to re-impose quotas on Chinese imports of various products to protect the domestic industry from market disruptions following the removal of global quotas that had restricted shipments to the United States for more than three decades.

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Economists Nationwide Endorse The FairTax Plan.

The plan includes HR 25/S 25, repealing and replacing the income and payroll taxes with a progressive national sales tax, as well as
HJRes 16, repealing the 16th Amendment.

Houston : Over 75 economists nationwide endorsed the FairTax in a letter delivered to the House, Senate, Treasury, tax reform panel and the President today. Tom Wright, executive director of FairTax.org, stated, "Nearly seven months ago an idea was born in the mind of a FairTax supporter who is an economics professor at the University of Virginia's College at Wise. He wants the broad public to know just how many economists have examined and recommend the FairTax plan. That idea became a project that has finally come to fruition. Over 75 economists, one of whom is a Nobel Prize winner, have now endorsed, specifically, the FairTax HR 25 and S 25, in writing. We call this a direct validation of our more than $22 million in academic and market research completed over the past 10 years. This economist endorsement letter was delivered to the offices of every single tax aide on Capitol Hill this week. We also made sure the President, his tax panel, and Treasury Secretary Snow had a copy. This letter further evidences the fact that Americans realize the inefficiencies of the current system and see the FairTax, HR 25 and S 25, as the proper replacement."

David L. Kendall, Ph.D., Professor of Economics and Finance from the University of Virginia's College at Wise, stated, "I support the FairTax and I asked other economists to join me with their support for a very simple reason: The FairTax offers Americans substantial and very real advantages over the income tax system we have now. Our federal income tax system is inefficient, far too costly, and simply not the best way to pay for government. I think all Americans are dismayed, outraged, and disgusted that our federal tax code contains millions of eye-glazing words spread across more than 60,000 pages. We all know it's a disgrace, and we all know it must be changed. Like most economists, I know that our income tax system slows economic growth, discourages work, and encourages current consumption over saving, saving that is needed to spur economic growth, which creates more jobs. Most economists agree that a consumption tax is less costly and more efficient than an income tax. Simply put, that's why I support the FairTax and that's why other economists endorsed my letter."

Tom Wright added, "The income and payroll tax systems are job-destroying travesties. Not only does the American public have the political will to replace them, the FairTax plan is viable (ask Texas and Florida), historically proven (ask the Phoenicians), acceptable (ask American voters), and now, endorsed by economists nationwide. The FairTax offers long-needed simplicity, efficiency, and fairness to all Americans by eliminating the income and payroll taxes. FairTax.org with a membership and supporter base of almost 600,000 strong is dominating the tax reform battle with thousands of American taxpayers' voices demanding relief."

Laurence Kotlikoff, Ph.D., chair of the economics department at Boston University, and co-author of The Coming Generational Storm, has stated, "Our tax code is a mess for a reason. Special interests pay for special favors. And with thousands of pages and counting, there are plenty of places for our politicians to hide the kickbacks. Meanwhile, all the exemptions, deductions, exceptions and special provisions reduce the tax base, which means higher tax rates and smaller incentives for individuals and companies to produce income. And whether the tax breaks are set in fine print or spelled out in bold type, they generally favor the rich, making our tax system less progressive than is generally believed. No tax system is perfect, but ours is so awful that fundamental reform is the only option. Fundamental reform is not just a necessity, it's also an opportunity to stop taxing income and start taxing consumption. My colleagues and I have been studying income and consumption taxation via computer simulations for some time now. We've found that switching from taxing wage and capital income to taxing consumption can significantly improve economic efficiency and growth. What's more, it can make our tax system much more progressive and generationally equitable. Fundamental tax reform is long overdue. Consumption taxation is the way to go."

Tom Wright thanked the volunteers who organized the effort to inform economists and asked for their input on the FairTax legislation by stating, "FairTax.org is a grassroots organization. Nearly 50,000 really active volunteers across the country are rallying behind the FairTax bill for various reasons. We thank Dr. Kendall and his efforts on behalf of the FairTax legislation and the economic principles it encompasses. HR 25/S 25 is the answer for our income and payroll tax burden. It is open, accountable, simple to understand, and fair to all Americans.

"No loopholes, no exceptions, and no American pays any federal taxes, hidden or obvious, up to poverty level consumption. This letter is an historic milestone for the FairTax concept. It coincides nicely with Federal Reserve Chairman Greenspan's comments and the good words by esteemed economist Milton Friedman when testifying before the President's tax reform panel in favor of consumption taxation. We believe after more than a decade of work, over $22 million dollars and hundreds of thousands of volunteer actions, our time is coming and the American people are fast becoming ready for the full tax replacement alternative, the FairTax.

Please view the letter in its entirety at http://www.fairtax.org/eco_endorsements.html or you may request a copy of the letter by fax or e-mail by calling Gloria Garza at 1-800-FAIRTAX #106 or e-mailing gloria@fairtax.org.

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The National Retail Sales Tax Alliance says:

When the income tax was instituted in 1913 the tax form was four pages long and you would had to have earned more than $300,000 (in 1994 dollars) to be even required to file a return. In 90 years this is what it has come to...
The average tax burden borne by Americans in 2000 was 33.5%
In the year 2000, the 1040 form was 70 lines long and had 117 pages of instructions.
Individuals and businesses waste nearly $200 billion a year filing their taxes. We bear this burden through higher prices and lower wages.
The IRS prints some 280 instruction forms to explain how to complete nearly 480 tax returns.
The tax code is so large that each year the IRS mails enough pages of forms and instructions to circle the earth nearly 28 times.
The number of IRS employees has more than doubled in the last 30 years.
Half of all filers hire someone else to do their taxes.
Believe it or not the solution is simple - REPLACE the entire income tax system with the FairTax!

The FairTax is a NATIONAL RETAIL SALES TAX; in other words, you would pay your federal taxes whenever you purchased a product or service. The FairTax means that the federal government would no longer withhold federal taxes from your paycheck - you get to keep more of what you make. You would no longer need to file federal income tax forms - the federal income tax system would be abolished. And under the FairTax all families will receive a monthly tax rebate check. Check www.fairtax.org to see a list of Frequently Asked Questions from the FairTax website.

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SNEAK-A-TAX

by Herman Cain
April 15th marks a national springtime ritual that has nothing to do with April flowers. It's the official due date to file our federal returns for taxes we know about and those we never see coming until after they hit us.

Sneak-a-taxes are taxes buried in the 9-million-word tax code mess.

Some of these sneak-a-taxes start out as temporary, but Congress conveniently forgets to end them. Or maybe they just pretend to forget.

Consider the withholding of income taxes. Congress enacted automatic withholding in 1943 as a way to fill the U.S. Treasury coffers each month and mask the true cost of federal spending. Congress explained to the public that, since the United States was busy fighting World War II, automatic withholding was necessary to fund the war effort in a timely fashion.

Congress also promised that withholding would end as soon as the war was over. That war ended 60 years ago.

Automatic withholding is a sneak-a-tax. When you receive a refund check, it means yougave the government an interest-free loan. Many workers have more taxes withheldthroughout the year than they will owe on April 15th to avoid writing Uncle Sam a check or incurring an underpayment penalty. They then seem overjoyed that theyreceive a big refund check from the U.S. Treasury. We are so conditioned to celebrateour sudden windfall from the government that we forget that it is our money in thefirst place. [Ed note: and money you would have earned interest on had you placed it in a savings account.]

The alternative minimum tax is another sneak-a-tax that should have been repealed years ago. The AMT laws were enacted in 1969 by a Democratic-controlled Congress to sock it to the so-called rich. The AMT is a calculation that assigns an alternate tax amount due if your regular income tax liability is not as high as Congress would like it to be.

It is simply an unfair way of forcing people to pay more taxes, even if they follow all the rules and mandates in the convoluted tax code. Each year, the AMT bandit holds up more and more of the so-called rich.

In 2004, anestimated 2.6 million taxpayers fell prey to the AMT. By 2010 33 million, or an estimated one-third of all taxpayers, will be subject to the AMT. All because youand your spouse worked hard enough to earn at least $75,000, which in 1969 was considered rich.

The AMT does not consider inflation, a family's decision for both spouses to work, nor the promotion you received because you worked a little harder last year. The AMT punishes people for investing, working harder and growing their small businesses.

More sneak-a-taxes include corporate income taxes, which lead to higher consumer prices, the double taxation on dividends and corporate earnings, taxes paid on Social Security benefits, raising the maximum income subject to payroll taxes, lowering the maximum limit for certain taxable deductions, limiting the equipment expensing amount for small businesses, and the many taxes, fees, and surcharges hidden in your monthly phone bill.

In fact, one of the most ridiculous sneak-a-taxes is the Federal Excise Tax. The Federal Excise Tax, which is figured at 3 percent of your phone bill, was enacted in 1898 to help pay for the Spanish-American War. That war ended 107 years ago.

The federal tax code is filled with bandits, loopholes and limited deductions. Mostpeople can't afford to find all the loopholes and deductions, but the tax-code bandits find everybody.

The only solution to locking up the tax-code bandits and making sure they never escape is to first repeal the 16th Amendment to the Constitution, which gives Congress the "power to lay and collect taxes on incomes, from whatever source derived."

Second, we must replace the federal income tax code with a national sales tax, also known as the FairTax.

Under the FairTax, all citizens will see an increase in their personal incomes and intheir ability to save and invest for their future and their children's futures.

Credit must go to President Bush for bringing long-overdue debate on overhauling the tax code mess to the forefront of the national political agenda. But Congress will not take action without a vocal and persistent demand from the voters in betweenelections, and not just on election days.

Let's put the tax code bandits out of business. Ask your members of Congress to replace the tax code with the FairTax. If they say no, or do nothing, then it's time to replace them.

And that will not be a sneak attack.

Herman Cain is chief executive officer of T.H.E. New Voice, Inc. and New Voters Alliance, and host of the nationally syndicated radio talk show The Bottom Line with Herman Cain. He is past chairman of the Federal Reserve Bank of Kansas City, and past chairman and CEO of the National Restaurant Association.

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Who's Regressive? Not the Fair Tax

by Howard Johnson

In a recent article by Robert Reich, “It’s the Wages Stupid” he suggests that a consumption (national retail sales) tax must always be regressive because it would hit people in the lowest income bracket hardest.” First, he is only partially right. To be accurate, those in the lowest income brackets spend “most all” of their income on “necessities” so they can’t save.

(The FairTax gives a pre-rebate to everyone to offset the payments made in taxes up to the poverty level, currently $24,000. This makes FairTax PROgressive.)

Saving and investing are luxuries that only those with disposable income can afford. Is it really wage increases that are needed? I would suggest that it is the income tax system in America that is keeping wages low and causing the savings crisis in America.

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Flat Tax or Value Added Tax Is NOT the Same As Fairtax

Does the Flat Tax have a chance of passing during Bush's last years in the White House? mary>>

I hope not, Mary, because the flat tax isn't the FairTax. Some differences:

The flat tax does NOT repeal the income tax; Fair Tax. does.

The flat tax, because it is in addition to the income tax, has the same loopholes, breaks for the wealthy and for lobbyists. The Fair Tax has no loopholes; eveyone gets 100% of their paycheck.

With the flat tax. withholding continues since the income tax is still in force. With Fair Tax individuals don't file and businesses deal only with the sales tax, no employee taxes.
The flat tax imposes the same tax burden embedded in prices of goods and services that we have now. The Fair Tax un-taxes wages, savings, investments and increases productivity.

A flat tax would be an improvement over the current system but it would still be open to manipulation by special interests; with the Fair Tax everyone pays the same and can control their tax liability. All taxes are rebated on spending up to the poverty level.

The flat tax taxes exported goods and doesn't tax imports; the Fair Tax makes US the only country in the world with no tax at all on productivity. Jobs will return to the US and we will look great to foreign investors.

The flat tax should reduce interest rates 25 - 35 percent but is neutral toward savings and investment (better than the income tax which is biased against investment and savings). The Fair Tax reduces rates by 25 - 35 % and is favorable to investment and savings.

The flat tax retains the IRS and the annual tax return fiasco. The Fair Tax gets rid of it.

The flat tax would have a positive effect on jobs but does not repeal payroll taxes. The Flat Tax repeals FICA taxes, payroll taxes, social security taxes, medicare taxes and self-employment taxes. Because these costs are embedded in prices, prices are expected to go down from 22% to 30%. It escalates the creation of jobs by attracting foreign investments.

The flat tax lower rates and improved simplicity of returns should improve compliance but the Fair Tax, by taxing everyone, makes compliance mandatory therefore adding revenue from drug dealers, tax evaders, foreign tourists, illegal aliens etc. to the tax base. Government income will be at least the same it is now and possibly a good deal more, which could lower the rate of the Fair Tax in the second or third year.

In the flat tax, business components are hidden as they are with the income tax and could still be embedded in prices. With the FairTax everything is visible and easy to understand and no taxes are withheld.

And yes, we can pass this in the next year or two if everyone helps. A letter to your Congressman asking him or her to support the Fair Tax would make a HUGE difference. The grassroots effort has grown to 10,000 supporters signed up and on individual state email lists and it's growing every day.

Like anything worthwhile, it needs support. But, Mary, they really thought women would never vote, didn't they! The Fair Tax -- if everyone will help -- can pass, too. And its a win/win situation for all.

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What The FairTax Means To Seniors

It’s “in” to be “old.”

The pre-boomer generation now sports grey hair and grandchildren.

Senior citizens are the larger portion of the overall population, too. In 1970, those over 65 years of age were 9.8 percent of the population. By 1995, seniors were 12.7 percent of the population. 13 years from now, seniors will account for 13.3 percent of the population and in 2020, they will account for 16.5 percent.

Seniors, ready to rest more and work less, often rely on incomes conbined of benefits from social security, government or company retirement programs and investments. They still have to pay income taxes. How much better to have 100% of each benefits check to keep each month, tax free. FairTax would make that happen.

Under the FairTax senior citizens, like everyone else, will receive a cash rebate at the beginning of each month. Therefore those with the lowest incomes will pay no tax at all. In fact, the Fair Tax is the only tax plan, including the current income tax regime, that completely "untaxes" the poor.

Income tax on social security will be repealed. The income tax imposed on investment income and pension benefits or IRA withdrawals will disappear. Pension funds, IRAs, and 401(k) plans had assets of over $9 trillion in 1998. An income tax deduction was taken for contributions to many of these plans, and all beneficiaries and owners of these plans expected to pay income tax on them upon withdrawal. Not if we pass the Fair Tax — once the income tax is gone, taxes on savings go with it. In other words, the hard-earned savings of seniors will be accessible, tax free.

Repeal of the corporate and individual income tax, and the estate and gift tax will have a substantial positive impact on the stock market. Seniors who own stocks either directly or through mutual funds, Individual Retirement Accounts, 401(k) plans, or otherwise, will experience significant gains. More seniors own stocks than any other age group. In addition, unrealized capital gains that would have been subject to the income tax when realized will no longer be taxed.

Newly constructed homes will be taxed, but formerly owned homes will not be. Currently, equity payments on homes must be paid from after-income-tax earnings (i.e. principal payments are not deductible). The purchase of existing housing is thus subject to the income tax. All owners of existing homes will experience large capital gains due to the repeal of the income tax and implementation of the FairTax.

Estate and gift taxes will be repealed. The need for small businesses and farmers to engage in expensive estate planning involving attorneys, complex estate freeze transactions, and expensive life insurance plans in anticipation of future estate and gift tax liability will disappear. The “death tax” will be repealed. Heirs will no longer need to sell the business or farm out of the family or borrow heavily, putting the business at risk, in order to pay the estate tax.

The Fair Tax will make the economy much more dynamic and prosperous. Consequently, federal tax revenues will grow, spending will be under less upwards pressure, and the deficit will decline. Budget pressure on entitlement spending, already significant, will become much more pronounced once baby boomers start retiring in 2010. The economic growth caused by a consumption tax will make it substantially less likely that federal budget pressures will result in Medicare or Social Security benefits cuts.

Seniors, able to live more comfortably in their last years, will be happy to know that their children and grandchildren will no longer labor under the yoke of the income tax and will know that they can leave the fruits of their lives to the next generation without fearing punishing taxation.

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