Congress Must Pass the Fair Tax Act

CNSNews.com ^ | February 27, 2004 | Mac Collins (R-GA)

[esarlls3]

Congress Must Pass the Fair Tax Act
By U.S. Rep. Mac Collins
CNSNews.com Commentary
February 27, 2004

Past Congresses have moved in the wrong direction by making our tax laws more complex and expensive for business and individuals to comply with. To keep our economy growing, Congress needs to take action now.

My colleague, Georgia Republican Congressman John Linder, has sponsored the "Fair Tax Act" (H.R. 25), a national retail sales tax on new goods and services. It would replace all individual and corporate income taxes, payroll taxes as well as capital gains taxes, estate taxes and gift taxes.

The Fair Tax replaces the way we are currently taxed, which is based on our annual income, with a tax on goods and services. The Fair Tax, basically, is a voluntary "consumption" tax. The more you buy, the more you pay in taxes. The less you buy, the less you pay in taxes.

The federal government will continue to be fully funded, including Social Security and Medicare.

The Fair Tax will reduce the costs of goods and services by 20 to 30 percent. It will allow workers to keep 100 percent of their paycheck, pension and Social Security payments with the exception being state or local withholding

The Gross Domestic Product will increase by almost 10.5 percent in the first year after its enactment because real wages would increase and tax compliance costs for business would decrease by 90 percent.

The fair tax would also be good news for investors. Real investment will initially increase by 76 percent relative to investments that would be made under our present tax laws. While this increase will gradually decline, it remains 15 percent higher than under the existing tax structure.

American exports will increase by 26 percent initially and would remain more than 13 percent above present levels under the current tax system.

Studies of the Fair Tax have shown that many U.S. companies will choose expansion here in the United States versus abroad, and in turn the United States will become more attractive to many foreign owned companies looking for expansion possibilities.

President Bush, during his State of the Union address in January, said the economy is turning around because the American people are using their money far better than government would have. The Republican majority in Congress was right to return it to the American people and not keep it in Washington.

A fresh and a fairer approach to a Federal tax system is needed. Therefore, it is time for Congress to pass the Fair Tax (H.R. 25).

As a cosponsor of the Fair Tax Act, I have asked Chairman Thomas of the Ways and Means Committee to hold hearings on this vital legislation. I am hoping those hearings will get under way in the near future.

(Congressman Mac Collins is a Republican representing Georgia's 8th Congressional District. He serves on the House Ways and Means Committee and the House Select Committee on Intelligence.)

[Taxman]

LOL!

How about a more pungent comment:

Congress needs to be changed periodically, much like a baby's diaper. And for the same reasons!

[donozark]

I would also ad NTU.org to your list. They have come out in favor of Fair Tax after survey of membership.

[null and void]

To believe a sales tax is "horribly regressive" one must believe that the "rich" don't buy more things than the "poor"...

[ancient_geezer]

I am creating a list of organization that support the NRST, NTU is on it.

The two sites I provide links for are focused solely on national retail sales tax and author as well as advocate NRST bills before Congress.

[31R1O]

What's a girl like you doing in a place like this. BTW, hi sis.

[esarlls3]

One of the beauties of the FairTax is applying the tax to everything, no exceptions, and using the Family Consumption Allowance to eliminate the regressive nature of an uncompensated sales tax.

The liberals can fight to raise the "poverty" level if they want, of fiddle with the rate and budget deficit/surplus. Any attempt to allow exemptions of different rates for some products and/or services must be met with vigorous opposition. Every tax system can, and will, be corrupted by politicians if we don't hold their feet to the fire.

You are paying hidden taxes today for everything you buy.

The FairTax is the only proposal that:

• Untaxes US exports and brings Jobs back to the US.
• Eliminates hidden taxes in retail prices. This is the most regressive tax.
• Eliminates paycheck withholding, including FICA. This is the second most regressive tax.
• Eliminates deductions. This is the third most regressive tax. (Two people donate $1000 to charity. The 30% bracket donor who itemizes only pays $700 after taxes. The 15% bracket donor who itemizes pays $850 after taxes. The poor widow, who does not get to itemize, pays the full $1000.)

If we need earned income credit, it is a welfare plan and should be administered as such. It is not a part of collecting revenue. If we want to encourage home ownership, we should offer grants or rebates as a welfare program. It is not a part of collecting revenue.

[Willie Green]

The NRST is an inherently regressive form of taxation that is truly despotic.

Long term, it would result in a two-tiered socio-economic stratification of our society.

It is not disimilar to a 21st Century eco-feudal system where the corporate aristocracy invest and expand their property holdings completely tax-free, while the serfs are overburdened with the excessive taxation on consumption and persuaded that it's supposedly "fair" because the consumption taxes are redistributed through the formal social welfare system.

[phil_will1]

"To believe a sales tax is 'horribly regressive' one must believe that the 'rich' don't buy more things than the 'poor'..."

That isn't the reason the FairTax isn't regressive. The rebate (Personal Consumption Allowance) is the mechanism for making sure it isn't. Fledermaus doesn't realize it, but in an earlier post, he argued forcefully for the PCA, rather than exempting certain items. One of the main reasons that this approach was selected was to keep government out of picking winners and losers. It is the simplest and fairest way to ensure that this sales tax proposal isn't regressive.

[Willie Green]

Why would the same administration praising the exodus of jobs as good for America want to stop them with a radical change in the tax system?

Feeding the monster (Corporate imposed socialism)

[reelfoot]

Fair Tax Bump.

[Bigun]

Mac Collins is ABSOLUTELY correct!

[phil_will1]

Thanks for posting this. One of the most positive aspects about this is that we now have someone other than John Linder in congress coming out and educating people. We need more of this. I am meeting with Congressman Linder in a couple of weeks and I plan to make that point.

The big issue this year is jobs and there is nothing that the federal government could do which would stimulate job growth like the FairTax would.

On the other hand, free trade when you have a tax system that handicaps your producers is equivalent to economic suicide.

[WhiteGuy]

So what is the answer?

The current tax on our earnings is a terrible mess, everyone agrees.

The NRST comes as close to solving the problem as anything I've ever seen.

I'm in favor of giving it a shot.

I'd love to hear about a better plan.

[Bigun]

...it would take away congress' #1 social engineering...

And THAT alone makes it worth doing IMHO!!

[Maigrey]

The problem I see with this reform of the US Tax Code is 2 fold:

(FTR, I support it rather than the behemouth that is the current US Tax Code)

1. The number of people who are employed within this system would lose their jobs. (Accountants, CPA's, Tax Lawyers, etc.) This would constitute a large share of people who go from being "in the know" to being out of the know.
I doubt that they would willingly support a reform that would faze out their employment.

2. People who are on fixed income (the more-weathly ones) would not support it, since it would cut into their finances (even with the FCA allowances.)

So how can a change be made to convince the AARP to vote for the reform?

[Veracious Poet]

Perhaps, but at least we could embargo the tax by holding back on purchases...you wanna see pandering politicos squirm? ;-)

[Veracious Poet]

I think you forget that we could choose what we wanted to purchase, rather than have a gun held to our heads for a portion of our income...

Sounds like a no-brainer to me. ;-)

[Veracious Poet]

"Congress needs a good spring cleaning and replacement of cobwebs!"

Correction: The two-party oligarchy needs to be watered down by creating viable parties outside of the GOP & DNC - It's the only way to change the status-quo inside the beltway and be rid of the Congressional Campers. ;-)

[kevkrom]

On #1... not much to be done for the tax lawyers, I guess, but accountants/CPAs can get back to doing what they're supposed to do -- help people and companies track and manage their assets rather than dealing with tax compliance. A little aggressive salesmanship should kep most of them in business.

As for #2, the case that needs to be made is that the NRST wouldn't "cut in" on anyone's finances, as it basically replaces one tax with another of roughly the same amount. The biggest difference is that it is visible as opposed to hidden. Granted, this is not the easiest concept to explain -- this is a challenge.

Plus, all of those investments that pay that fixed income would be free of taxes on capital gains, and people with tax-deferred plans would really make out because that principal will completely escape income taxation.

[null and void]

And THAT alone makes it worth doing IMHO!!

Mine too, but then again, we aren't congresscritters, either...