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?
Too bad they only accomplished minor tax cuts and significant spending increases while they had complete control of the government.
Anyone who makes retail purchases.
Publicly-held companies would still have to disclose their numbers to their shareholders, monitored and enforced by the FEC. They would be accountable to the shareholders -- the folks who own the company, after all -- but not to the IRS.
YAWNNNN, yourself.
Each state does the collection and re mitts the Fed their share. Since all but a few states already have retail sales taxes in place, their is no massive new bureaucracy necessaryReally?
Statement of Billy Hamilton, Deputy Comptroller,
Office of the Texas Comptroller of Public Accounts,
on behalf of Honorable Carole Keeton Rylander, Texas State Comptroller of Public Accounts
Testimony Before the House Committee on Ways and Means
Hearing on Fundamental Tax Reform
April 11, 2000
My name is Billy Hamilton, and I am the Deputy Comptroller for the State of Texas. Carole Keeton Rylander, the Texas Comptroller of Public Accounts, was delighted to receive an invitation to testify before this committee regarding the Fundamental Tax Reform measures under consideration today. Unfortunately, Comptroller Rylander's schedule did not permit her attendance, and she has asked me to testify here on her behalf.
My comments today are directed only to the feasibility of state administration of the Fair Tax proposed by H.R. 2525. I do not intend to comment on the economics or any other aspects of the proposal.
The Texas Comptroller's office has administered a sales and use tax since the 1960's, and I have been involved with administration of the tax since 1982. Last year, the Texas Comptroller collected $13 billion in sales tax revenue from more than 600,000 businesses. I offer my own experience with sales tax administration, as well as the size of Texas' sales tax program, as the basis of my qualification to speak to you about the administerability of H.R. 2525.
As you know, H.R. 2525 would permit states to collect and administer the Fair Tax on behalf of the federal government. In my opinion, Texas would be well-equipped to administer the Fair Tax based on our experience in administering our own sales tax. Even though the base, rate and other characteristics of the Fair Tax are significantly different from the Texas sales tax, it would be feasible for our office to collect the Fair Tax by expanding and enhancing the systems we currently have in place. For example, we would:
· Expand our current system for registering Texas retailers to include registration of sellers under the Fair Tax (615,000 businesses are currently registered as sellers in Texas; under the Fair Tax, 1.5 million Texas businesses would have to be registered);
· Expand our taxpayer assistance efforts to respond to a larger volume of telephone, letter and e-mail inquiries from sellers who collect the Fair Tax and individuals who pay it;
· Expand our Revenue Processing Division to process more returns and tax payments on a more frequent basis and to remit tax collections to the federal government on an almost-daily basis;
· Expand our current audit team and train all auditors to examine businesses for both the Fair Tax and the Texas sales tax; and
· Expand our information technology systems to collect and maintain the computerized records critical to effective administration of a consumption tax like the Fair Tax.
The expansion of our systems to administer the Fair Tax, in the manner I've just described, would be sizable. Under the Fair Tax, we would serve approximately 900,000 more filers than we do currently. We estimate that serving that many additional taxpayers would require 1,100 to 1,600 more full-time employees. The Texas Comptroller currently employs about 2,700 people on a full-time basis.
In spite of this large expansion, the compensation for collecting the Fair Tax that would be provided to states under H.R. 2525 would likely cover our projected costs. As a first approximation, we estimate that the cost to the Texas Comptroller's office for collecting the Fair Tax at full implementation would be $100 to $150 million per year. I emphasize, however, that there would be significant costs to begin collection, including the cost of facilities to house the additional processing facilities, the capital costs of information technology and revenue processing equipment, and the costs of notifying, registering and educating taxpayers on the new tax.
In closing, I believe that if the Fair Tax is to become a reality, the U.S. government would be well-served to make use of the existing expertise of the states. Many states have administered consumption taxes since the 1930s and have developed particular capabilities in this area. We also have extensive experience in dealing with the affected businesses. As long as the administrative fee paid to the state is adequate in relation to the costs of collection, I see no reason that the State of Texas could not effectively administer the Fair Tax.
Any insight on where all the money will come from for the states to "expand" their services, train new emoployees as well as new infrastructure before one dime of Fairtax is collected...Times 50
Don't forget, all those evil IRS employees won't be fired on day one, in fact not for several years after (if ever) either.
Source? Oh, just a rough guess ....but whatever the more acurate estimate might be, the point remains the same: Sales tax’s higher impact/burden on poorer folks.
There's already a 23% tax on those goods. Corporations don't pay the tax; they pass it along to the consumer. It's embedded in the cost of the product.
BTW, can you imagine what a 0% income tax would do to our economy?
A college student that can’t see throught this Fair Tax socialist BS, deserves to be a marxist.
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You’re confused , a highly progressive income tax was part of the Communist Manifesto.
When are you going to stop with that same lie?The only lies are from AFFT, Boortz...and now you.
I don't expect you to understand it, but it says exactly what Always Right says.
Jorgenson's Final Report to Americans for Fair Taxation (In part)
5. Since producers would no longer pay taxes on profits or other forms of capital income under the NRST and workers would no longer pay taxes on wages, prices received by producers, shown in the sixth chart, would fall by an average of twenty percent
The Fair Tax promotes economic ruin. No thanks. I’ll take a flat income tax any day, but not a national sales tax.
Publicly-held companies would still have to disclose their numbers to their shareholders, monitored and enforced by the FEC. They would be accountable to the shareholders -- the folks who own the company, after all -- but not to the IRS.Maybe you should have posted that info to the other poster. S/he is the one that apparently didn't know.
You’re still pumping that lie, eh?
Income taxes predate Marx by a couple hundred years.. Most Jr High students know that one...
Why are you championing the income tax?
Please tell me why it is a superior idea...
assuming facts not in evidence again... is that all you’ve got?
Please tell us more about your buddy Mr Marx...
I could be mistaken, but here's how I understand sales taxes, and I would expect the Far Tax to work. Office supplies are taxable; for example, if you buy a ream of paper to print out records or memos, it's taxed. If you're in the office supply business, you don't pay tax on a ream of paper; you collect the tax when you sell it. If you publish books, you don't pay tax on paper or ink; you collect the tax when you sell the book.
That's the difference between a retail sales tax and a value-added tax; the former is intended to tax each product once, the latter at each stage where value is added. For example, under the VAT as used in the EU, you'd pay tax on the paper and the ink, and then collect the tax again when you sell the book.
As the Jesuits said, give me a child until age 7 and he’s mine for life.
IOW brainwash then early and often.
While good conservative universities are also essential, you have lost most long before university age.
Apples and oranges. To teenagers who are STILL only making $8 per hour, $3 gas is a big deal.
Read your post again. You are talking about CPI, which has nothing to do with inflation ... if you know what inflation means.
The CPI as a measure of inflation is for rubes like you who think the government is giving you any decent information.
If you want to understand inflation, you need to understand money and credit.
The infrastructure is in place. Today, most states have an income tax; the feds do much of the bookkeeping. Abolish the IRS, and there's your pool of bean-counters -- they will go to work for the states, which will then assume their salaries.
In the short term, there will be a hit for the states. I would assume that the states subtract a cut for their overhead before remitting to DC -- but I haven't drilled down tat far into the nuts and bolts.
Bottom line, I expect some long-term savings from the Fair Tax, but nothing dramatic. There will still need to be tax collectors. The Fair Tax will shift the burden - and the power that comes with it -- from the federal government to the states. It will cost somewhat less, because it's more efficient -- instead of monitoring every worker, the government would only need to monitor every retailer.
If you're a small business owner, selling new goods on eBay or in a flea market stall or from a card table on the sidewalk, you're free not to register as a retailer -- you're not collecting tax on your sales, but it's all good, because you paid the tax when you bought the goods. If you prefer, you can register, get a tax ID number, pay no tax on goods for resale, and then collect the tax when you make the retail sale. Pretty much how it works at the state level now.
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