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?
Yes, but I can clearly see what the income tax is doing already. Tell me then, why do you support the income tax? What are its advantages?
We are in the greatest period of commodity price inflation (2002-2007) since the Civil War, far worse than the Vietnam-price control-oil shock inflation of the 1970s. Just look at the board, sheesh.
Prices stable? That's the howler of the year.
Gonna happen. Sure. About 10 days after the Stanley Cup finals are played in hell.
Once again, your argument does not follow. What do current price fluctuations have anything to do with a policy that is not in force yet?
If they didn’t, you’d probably see a backlash just like we saw with the amnesty bill.
You, not I, asserted price stability, presumptively as a bulwark for your scheme. I merely pointed out that prices aren't anywhere near stable at this time, and therefore that that feature of your argument was plain rubbish.
You, sir, are the one who mentioned price stability as being advantageous in this discussion, not I.
I really doubt that prices will be anywhere near stable. suppliers will still charge as much as they can, and the sudden ‘decrease’ in their costs will not be entirely passed on, plus the government will get at least as much as they’re getting now. that means the item costs more.
I’m gonna retire with a very fat pension and will not be affected much if things I buy go up in price. if you want to shoot yourself in the economic foot, then go right ahead.
without a guarantee that the income tax will be eliminated (ANd I seriously doubt it ever will - constitutional ammendment and all) this proposal will give big government another pocket to pick. we’ll end up paying more.
kinda like chickens putting their necks willingly onthe block hoping the farmer will reward their act of consideration.
Another problem with the fairtax. We all get a “prebate”, to cover the costs of necessities. But we get that whether we buy necessities or not.
So a poor person has just recieved their big prebate check. Now they see that all the food they buy costs 30% more. (23% of 100=23 bucks, which means core price was 77 bucks; 23 bucks added onto 77 bucks is about 30%).
Sure, they have the extra money to pay for the food, but they will still have a great incentive NOT to buy as much food, and to spend the money elsewhere. IN fact, they could well run off and spend it on a big screen TV, because it’s a windfall they weren’t expecting.
So now we’d have a fight to provide the cost of the extra tax in the food stamp program, so that poor people would again have enough money to purchase food for their family.
So would we get rid of the prebate for people on food stamps, and add it into the food stamp program? How complicated will that be?
The populace, equally generally, do not understand tax arithmetic (unsurprisingly, since it's so deliberately obscure in many cases). Case in point is the famous ''23% figure that the 'fair' taxers throw about. For over 200 years of the Republic, sales taxes have been computed at retail as what you lot call an 'exclusive' tax.
Now, you lot want to spout an 'inclusive' rate, the better to deceive by using a lower figure, instead of the accurate (and traditionally calculated) 29.87% rate. You are attempting, effectively, to substitute the calculation of 'markup' (i.e. based on final sales price) for the calculation of 'profit'' (i.e. based on cost of goods) .
And this is completely dishonest. As are the 'fair' taxers.
If you really believe this than you are no conservative, or at least have no faith in the free market. Or at least you'd have to stipulate why there is suddenly no competition. If you could argue that, then I may agree with you, but I'd have to switch parties.
As I said before, if they don't put the fair tax and elimination of the income tax in the same bill, we would see an uprising like that of the amnesty bill. (Really, probably worse.) Although we are shooting ourselves in the foot, economically speaking, with a whole host of other things currently, this isn't one of them.
Irregardless, why do you like the current tax system so much?
You'll note, also, that the 'fair' taxers will be able to perform (and doubtless will perform) another bit of sleight-of-hand when it comes to wage contracts that are tied to CPI. Not to mention also purchasing contracts that are tied to one or another industry index.
If ever there were a more powerful inflation accelerant than the 'fair' tax (barring of course price controls), I'm unable to name it.
Good introduction to the FairTax for college students. There’s already a lot of FUD on this thread, but momentum is growing. I do wish a better candidate than Huckabee would pick up the idea, but it’ll come sooner or later.
I don't mean to pick on you, specifically, because you're far from the only person who's made such a comment, but I sure do get tired of hearing people describe the FairTax as "inflationary" on a conservative web site.
The “neurtral” claim of the Fair Tax Scam is founded on the notion that the US citizenry is taxed at the right amount. We are taxed to much, NOT just incorrectly.
The Fair Tax Scam is just a newer more invasive way to put washington DC further into our personal lives. (do you have your reciepts to prove you bought used? Why buy in the USA, just order from outside the USA.)
This is titanic deck chair rearranging instead of real LOWER TAXES reform.
It only promotes “economic equality” AFTER the sixteenth amendment has been repealed. Until then, it’s just another tax increase.
hunter supports this idiocy. He is still surging to 1%.
A college student that can’t see throught this Fair Tax socialist BS, deserves to be a marxist.
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