FairTax Editorial written by Congressman John Linder, sponsor of the FairTax Bill

FairTaxNation.com ^ | John Linder

[Man50D]

Is it time for the FairTax?

When they see a problem – immigration, energy, or a collapse of the credit markets – politicians step forward and announce, “We must do SOMETHING!”

That part is a given. What is not a given is what SOMETHING is. And, alas, it comes down to whatever the majority party in the House and in the Senate decides it will be. It will generally be a combination of taxes and spending, and in the current trillion dollar “stimulus” package the spending portion is pork and the tax portion is welfare.

To get people back to work you must make the future more rewarding and predictable so small business owners find it in their own interest to hire more people. That would argue for business tax cuts and extending the preferential treatment for capital gains and dividends to attract investment. Not this week. Much of the “tax” portion of this bill is the refundable tax credit. Government checks will go to those who pay nothing in income taxes or payroll taxes. In fact, this bill increases the number of Americans who get a check from the government in excess of all of the Federal taxes they paid from 15 million to 22 million.

There is a proposal that would fix many of the problems we face with no additional government spending. It is called the FairTax. The FairTax eliminates all taxes on income of any kind. No more personal or corporate income tax. No capital gains, dividend, estate or gift tax. No alternative minimum tax. No payroll tax. All would be replaced with a national sales tax. Instead of giving the government 33 cents out of every dollar you earn you will give the government 23 cents out of every dollar you spend. The proposal will raise the same revenue as the current code, but you will choose when to pay taxes and how much to pay by how you choose to spend.

By eliminating tax withholding, the average income earner would get an immediate 50% increase in take-home-pay. How’s that for a spending stimulus?

There are four major economic issues already driving us to a consumption tax such as the FairTax. Perhaps we should consider it now before we commit to an additional trillion dollars in debt on future generations.

1. A Harvard professor’s study showed that, on average, 22 cents out of every dollar you spend today represents the embedded cost of the current tax system. You are paying the income taxes, payroll taxes and accountants and attorneys to avoid the taxes of each of the many companies it takes to get a loaf of bread to your table.

2. A Tax Foundation study says that we will spend $350 billion simply to comply with the income tax in 2009. We spend billions more each year calculating the tax implications of business decisions. That isn’t just inefficient. That is stupid. Eliminating this would give us the equivalent of a $4 trillion tax cut over 10 years without any impact on the budget.

3. There is today in the underground economy in excess of $2 trillion not paying its share. As the tax code gets more complicated it is easier to go underground. Under the FairTax, these dollars would be taxed every time they bought a loaf of bread.

4. There is, in offshore financial centers in dollar denominated deposits, more than $13 trillion looking for an opportunity to get into our markets. Some of that money represents corporate profits from foreign sales that—because they will be taxed at 35% if repatriated—will likely be invested offshore. Under the FairTax we will be the world’s largest and most stable tax haven. That increase in liquidity would make what we have done – and will do – with taxpayers funds look trifling.

Those four circumstances will be addressed by the FairTax. None will be altered if the income tax and the IRS are left in place. If we are serious about getting more cash into our system and leaving more money in the pockets of workers for them to spend, we will look seriously at fixing a broken tax system that even Jimmy Carter called a disgrace.

If our goal is just to spend $1 trillion on new entitlements and favored Democrat constituencies and thus burdening future generations with increased taxes and a diminished standard of living, the Obama proposal is the right prescription. If our goal is to free American markets and the American entrepreneur to innovate, prescribe the FairTax.

[Man50D]

Fair Tax ping!

[wilco200]

where’s the FLAT Tax bill.

Problem with the Fair tax is that we are going to end up with an income tax AND a high sales tax. Double whammy!

[Neoliberalnot]

This will Never happen. Tax lawyers,trial lawyers, and the crooks in the Whitehouse would never allow a fair tax because it means a loss of power. These greedy shysters will not relinquish one unit of power and control short of armed confrontation.

[cc2k]

Here's a recipe for 100% Democrat support of the Fair Tax.

Tell them it includes a provision for the government to send a monthly check to everyone in this country, whether they pay taxes or not. And that by manipulating the new "fair tax code," the Congress will be able to set the conditions for that check and change the terms as they see fit to reward or punish anyone they want.

[unixfox]

These greedy shysters will not relinquish one unit of power and control short of armed confrontation.

Then so be it.

[Realism]

“Problem with the Fair tax is that we are going to end up with an income tax AND a high sales tax. Double whammy!”

Then it wouldn't be the Fair tax plan. Im taxed when I earn it and again when I spend it. Thats not fair, nor is it applied to everyone. It's easy for people to get paid under the table or hide income, not so easy to hide when your spending it. Its all about everyone paying their fare share, then maybe I can pay less.

[SERE_DOC]

the only non violent way is to with hold paying your taxes, it is the only way to stop this feeding frenzy in DC. short of that is your way, I am not opposed to either.

[Man50D]

where’s the FLAT Tax bill.

There is not one "flat tax" bill. There are several variations because flat tax proponents can't agree one one bill and only illustrates the point the flat tax is going nowhere.

Problem with the Fair tax is that we are going to end up with an income tax AND a high sales tax. Double whammy!

Congress critters could have enacted both as separate taxes a long time ago but for one problem. They realize the outrage adding a sales tax would cause and they don't want to face their constituents wrath.

Your remark only proves you like many people don't realize we have both with the income tax. Corporate taxes are costs to businesses. They pass these costs onto the consumer in the form of higher prices by embedding the taxes at every stage of production in every product. You are paying multiple taxes with each purchase. These embedded taxes are essentially a sales tax. Congress critters prefer this method of double taxation since people don't see the second tax. Out of sight out of mind. The Fair Tax will replace these multiple taxes with one tax, at the final stage of production.

[Man50D]

This will Never happen. Tax lawyers,trial lawyers, and the crooks in the Whitehouse would never allow a fair tax because it means a loss of power.

That would be true except for the fact the total number of lawyers in the Whitehouse are vastly out numbered by those in the general populace who don't work in the Whitehouse. The grassroots movement for the Fair Tax is growing as evident by the increasing number of cosponors with each session of Congress.

[11th Commandment]

I am becoming a huge FAN of the FAIR tax. This point from the article is something I have been searching for:

A Harvard professor’s study showed that, on average, 22 cents out of every dollar you spend today represents the embedded cost of the current tax system. You are paying the income taxes, payroll taxes and accountants and attorneys to avoid the taxes of each of the many companies it takes to get a loaf of bread to your table.

This is important because the FAIR tax rate on sales is about 33% (27% grossed down). I'd pay 11 points more on sales to avoid my personal 7% payroll tax and my personal fed tax, plus my employers payroll tax that they can pass back to me.

[Neoliberalnot]

Don’t pay your taxes, have your property taken, be sent to prison, and get a bullet in the back if you resist. This is not an option unless you are willing to pay the consequences.

[Tolik]

Fair Tax. A change I hope for!

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[SERE_DOC]

there are consequences to being a slave too. I would rather die on my feet than live on my knees.

So sparky what is your poison:

bend over and drop trou,

be just like Mikey?

or grow a pair and stand for the Republic?

[SERE_DOC]

there are consequences to being a slave too. I would rather die on my feet than live on my knees.

So sparky what is your poison:

bend over and drop trou,

be just like Mikey?

or grow a pair and stand for the Republic?

[UCFRoadWarrior]

Good to hear the FairTax is gaining more sponsorship....it is such a better way to raise revenue, and, in the long run we would pay less on taxes.

Also, the FairTax would surely stimulate the economy....it would force the government to focus on making the economy strong...not the government

[unixfox]

We need to start a movement where MILLIONS of us refuse to file on Apr 15th and refuse to send them any more of our money!

I know that's hard when an employer withholds from your paycheck. However, when MILLIONS refuse to file it gets their attention.

[wilco200]

“Your remark only proves you like many people don’t realize we have both with the income tax. Corporate taxes are costs to businesses. They pass these costs onto the consumer in the form of higher prices by embedding the taxes at every stage of production in every product. You are paying multiple taxes with each purchase. These embedded taxes are essentially a sales tax. Congress critters prefer this method of double taxation since people don’t see the second tax. Out of sight out of mind. The Fair Tax will replace these multiple taxes with one tax, at the final stage of production.”

I get it. I just need the proof of a constitutional amendment to repeal taxation, before I would vote the let the govt. raise taxes.

[Mr Ducklips]

The quoted 23% sales tax rate, if computed as is every other sales tax rate, would be 29.87%.

For example, if a vendor must net $1.00 for his product, he must sell it for $1.30 under the FairTax system: 23% ($.30) goes to the gov'mint and 77% ($1.00) goes to the vendor.

That's known as a 30% sales tax rate in this country, no matter what Linder or Boortz say.

[Neoliberalnot]

Have you refused to pay in the past or will this be a new endeavor? Single individuals will make no impact. Organized en masse, perhaps. My in-laws were destroyed by such an act—they lost their business, house, and most of their life savings and they were hounded for a decade. My father-in-law was a B17 pilot in WWII and is now a ward of the state living in a nursing home—busted. Either you will take this punishment or time to lock and load.