Posted on 01/14/2008 6:51:54 AM PST by K-oneTexas
COLUMN: The FairTax Promotes Economic Equality Submitted by on 01-13-08, 10:16 pm | Updated on 01-13-08, 10:35 pm |
by Thomas Davis
President John F. Kennedy once argued that our tax system “reduces the financial incentives for personal effort, investment and risk-taking.” Unfortunately, there has not been much improvement since JFK's presidency.
In fact, the tax code has become more complicated and burdensome. Since 1954, the number of words in the IRS regulations has increased by 939 percent. Just consider, how much time do you, or more likely your parents, spend preparing taxes? Or how much money do your parents spend having an accountant prepare your family's taxes? And how much time does a company spend making business decisions with respect to the tax code?
The answer is astounding: Economists estimate that we spend over $200 billion every year and about 5.8 billion hours complying with the tax code. American companies spend another $200-300 billion making business decisions based on tax implications. The average American spends twenty-seven hours preparing his or her income tax forms, and almost 45% of tax compliance costs are directly incurred by individuals.
While the current situation is complicated, the proposed solution is simple. It's called the FairTax. Some of the nation's most eminent economists and businesspeople have researched and developed a system applying a national sales tax of 23% on all goods and services at the retail level. In return, no more income tax. No more corporate income tax. No more payroll taxes, gift tax, alternative minimum tax, self-employment tax, capital gains tax…you get the picture. By the way, no more embedded tax in the goods and services you currently purchase, which averages around 22%.
Whether you realize it or not, the cost of corporate income taxes, payroll taxes and other taxes have been factored into the price of the goods and services you purchase. So when politicians try to tax what they deem to be greedy businesses by assessing higher corporate income taxes, those taxes are actually passed on to you, the consumer. By eliminating embedded taxes, the prices of what you buy after applying the 23% consumption tax would hardly change from current prices. The difference is that you bring home your entire paycheck and that tax is transparently assessed at the end, not through an onerous and bureaucratic system applied within a price tag.
And don't worry; this simplified system is revenue neutral. The government will collect as much money using the FairTax as it does under the current system, having no effect on current ability to fund government programs. Actually, economists expect economic growth to be around 10.5% for the first year, effectively increasing the government's revenue.
Under the FairTax, you would get your entire paycheck and would only pay tax on what you consume, encouraging Americans to do something we do not do well — save. In order to make the FairTax fair, all people would receive a prebate, or advanced rebate, that reimburses them for tax paid up to the poverty line. In other words, you only pay tax for living beyond your necessities.
Without a corporate tax, America will encourage companies to come back to the United States, providing new jobs for Americans. Without embedded taxes factored into the price of a product, American companies can export goods and sell them at prices lower than foreign products. While the benefits are numerous and the drawbacks are few, I encourage you to question the FairTax Act of 2007. Challenge it. Look for shortfalls. But don't forget to take the time to find credible answers. Read The FairTax Book by Neal Boortz and Congressman John Linder. Visit FairTax.org. Search the Web for scholarly criticism. You will see that the FairTax stands for innovation and equality. Do you?
how is it ‘economic equality’ when only the rich would be able to affoprd new cars, new major appliances, etc.?
seems like someone’s pulling a snow job on us.
23% National Sales Tax = 100% Black Market Purchases to avoid the 23% Tax.
The gross misrepresentation continues. That number, which the fairtaxers paid for, includes taxes paid by employees, according to Dr. Jorgenson who did the study for them. In fact those taxes paid by employees, represent the majority of the 22% embedded taxes that the study found. Taxes paid by corporation and their share of the payroll tax only adds about 7% to the cost of the product. It is all smoke and mirrors. Those embedded taxes can not come out of the product unless employees agree to take a cut in pay, which ain't gonna happen. Price go up significantly under the fairtax after the 30% sales tax is added on the price.
ping + 30% delivery tax.
Stamp Act. Tea Act. Sugar Act.
The whole “prebate” thing to me doesn’t sound right somehow. If I make 20K$ and say the “poverty line” is 20K$, then they are going to pay me and everyone else in the country a prebate of 4600$?
That is why we need a LIVING prebate of the full 20k.
;^)
Fair Tax Ping
...Don’t forget the single moms working two jobs that Huckabee says the GOP doesn’t care about. Yeah, we’re being snowed, Perot-ed, and if Huckabee gets the nomination, this country is blowed.
How does he plan to eliminate state and local sales taxes? There's that little thing called the Constitution.
When Nixon put on those idiotic wage-price controls in 1971, I recall doing very nicely by purchasing goods (chemicals in this case) for companies that didn't buy enough in the infamous 'baseline' period, and so thereafter couldn't buy enough for their needs after the controls came on.
The 'fair'y-tale tax would create lots of similar opportunities. LOTS. For example, people on the Gulf Coast would be able to profit very nicely by sailing across the Gulf to Mexico, buying a bunch of whatever goods, and selling them outside the 12-mile limit. Or perhaps even bringing the goods ashore and trunk-jobbing them.
Can you imagine what a 23% tax on food and other nacessities would do to our economy?
Good point, except that this government has routinely ignored — hell, trampled on — the Constitution for at least 7 decades. The Constitution won’t stop this lunatic and mendacious scheme, unfortunately; it’ll have to die under the weight of its own dishonesty.
there are two issues in this campaign that are non starters - illegal immigration and this phoney ‘fair’ tax scheme.
The fantasy notion that the Regress will get rid of the income tax, ever, is driving this nonsensical idea. Pass a 'fair' tax, and we'll have both a 'fair' tax AND an income tax.
Not when legislation is in an omnibus bill; that requires that one must expire prior to another being in place.
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