[Remedy]

National Taxpayers Union

March 31, 2003

The Honorable John Linder
1727 Longworth House Office Building
Washington, DC 20515

Dear Representative Linder:

On behalf of the 335,000-member National Taxpayers Union (NTU), I write to offer our endorsement of H.R. 25, the FairTax, and to urge all Members of Congress to join as cosponsors. Should H.R. 25 come before the House for a vote, it will be heavily weighted in our annual Rating of Congress.

America's present Tax Code is extremely punitive and complicated, taking more from taxpayers than ever before. The current Tax Code is clearly not what the nation envisioned when it ratified the 16^th Amendment nearly 100 years ago.

Initially, rates were extremely low. In fact, the tax rate on the first $20,000 of income was a mere one percent, while the highest rate was still a fairly reasonable seven percent on all income above $500,000. In 2001 dollars, that would equate to a one percent income tax on all income up to $300,270 while the seven percent rate would apply only to income earned above 7.2 million dollars. In fact, as late as 1939 only five percent of the population was required to file income tax returns.

Today, the federal income tax is extremely "progressive" in the worst possible sense of the word. Dangerously burdensome on both the taxpayer and the economy - and maddening in its complexity - it has become a detriment to America's economy.

While progressive income taxes are inherently unfair and unquestionably slow our economy, the regressive nature of our current payroll taxes certainly hurts those who can least afford to pay them. As you are aware, the poor in America do not pay excessive income taxes, but they do pay excessive payroll taxes.

Because your FairTax would replace both the income and payroll taxes with a simple, fair, 23 percent sales tax with monthly rebates, it would greatly benefit all Americans and our national economy.

As the federal income tax deadline approaches, Americans are vividly reminded that the burden of filing taxes can be nearly as bad as the burden of paying taxes. We salute you for your effort to reform both problems and urge your fellow Members of Congress to join you in this effort by working to pass H.R. 25.

Sincerely,

Paul J. Gessing
Director of Government Affairs

 

FairTax Facts! Americans For Fair Taxation (AFFT) is a non-partisan organization of grassroots volunteers who are working diligently to get H.R. 25, The Fair Tax Act of 2003 enacted. They currently number some 420,000+ members and are growing daily.

The American Farm Bureau Federation (AFBF!) supports the FairTax. The State Farm Bureaus membership totals over five million members.

Scrap The Tax Code! An excellent FairTax and NRST website!

FairTax Volunteer - Get Smart

Ten Worst Tax Laws

 6. Progressivity of Income Tax Rates

• Score: 47
• Started when: 1913
• By whom: President Wilson’s original income tax law featured progressive rates.
• Why: Class war. Politicians argue that people who make more money should pay a larger share of it in taxes. It is central to the politics of envy and resentment that is the staple of the Democratic Party.
• What it does: The tax rate escalates in steps for progressively higher levels of income. Under current tax law, the first $12,000 in taxable income is taxed at 10%; from $12,000 to $46,700 at 15%; from $46,700 at $112,850 at 27%; from $112,850 to $171,950 at 30%; from $171,950 to $307,050 at 35%; and from $307,050 up at 38.6%. This punishes people as they make more and reduces their incentive to invest and create jobs.
• Revenue: In 1999, the highest personal income tax bracket yielded $164 billion in revenue, 8.6% of total federal revenues.
• Reform efforts: The drive for a flat income tax, boosted by the Steve Forbes in his 1996 presidential campaign and promoted by now-retired Rep. Dick Armey (R.-Tex.), has stalled.

7. Income Tax Withholding

• Score: 46
• Started when: 1943
• By whom: President Franklin Roosevelt signed the Current Tax Payment Act into law.
• Why: Roosevelt promoted it as "a temporary wartime measure" to ensure a steady flow of funding for World War II. Lawmakers feared taxpayers might refuse to pay the higher tax rates and surcharges enacted in the Revenue Act of 1942.
• What it does: Compels employers to withhold federal taxes from workers’ paychecks and pay them directly to the government on the workers’ behalf
• Revenue: According to the IRS, in fiscal year 2002, the federal government took in $1.39 trillion through income and payroll tax withholding.
• Reform efforts: In 2001, Representatives Ron Paul (R.-Tex.), Jeff Flake (R.-Ariz.), and Steve Largent (R.-Okla.) introduced H.R. 1364, the Cost of Government Awareness Act, which would have eliminated the withholding of income taxes and required individuals to pay income taxes in monthly installments. No serious effort is now under way to pass such a law.

 

The Tax Man Cometh As Cato Institute President Ed Crane has said, "Taxes are actually the price we pay for our failure to create a civil society."

He’s right. In a genuinely "civil society" where Americans depended more on private institutions, families, charities, and private enterprise to solve society’s problems, and were dependent less on government, we wouldn’t need an IRS that collects $2 trillion in taxes (more than the entire GDP of most countries) each year. We might not need an income tax system at all.

This is useful food for thought as tax filing season is upon us. Today, when combining federal, state and local taxes, many middle-income Americans work as large a share of the day to pay the government’s bills as their own, according to a new report by the Texas-based Institute for Policy Innovation.

It wasn’t always like this. In fact, Justice Holmes can be excused for his enthusiasm for paying taxes because during his lifetime taxes were less than one-third what they are today. In fact, for the first 100 years of the nation, taxes were reasonably non-oppressive. In colonial times opposition to high taxes was deeply ingrained in the American spirit (the Revolutionary War was, after all, the first American tax revolt) and this hostility lasted throughout the 19th Century.

But even more encouraging is the rising tide of voter support for the FAIR Tax. This proposal would replace the entire income tax structure with a national retail sales tax. Rep. Jon Linder (R.-Ga.) is spearheading the crusade for this repeal of the income tax. Linder says that abolition of the income tax and implementation of a national sales tax would create thunderous rates of growth for the economy, which would be liberated from the shackles of high tax rates on work and income.

The FAIR Tax plan would also get the IRS out of our lives and out of our pocketbooks, Linder adds. It would no longer be the government’s business how much money you made.

And perhaps best of all, the FAIR Tax would make April 15th just another warm Spring day again, rather than a day that we approach with dread and trepidation. The average American now spends 15 to 20 hours on tax preparation and half of us wait till the last week to do our taxes. With the Iraq war winding down in victory, here’s hoping that our next major triumph in America is in the war against tax tyranny.

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[The Old Hoosier]

I'm very afraid of the Fair Tax. It will be a lot easier for Congress to hike it to feed their spending binges, because people won't notice the money gone from their paycheck. Just look at the gas taxes and tobacco taxes the government collects--state govts make more on each pack of cigarettes and each gallon of gas than the tobacco/oil companies do.

[Remedy]

ping

[Cicero]

This could be a killer for people with large families. Folding Social Security into it is dangerous, too, because the social security commitment is openended, and after decades of abortion there will be a huge bulge of retirees as the boomers grow older.

I would prefer gradual tax modification rather than sweeping reform all at once.

[Born to Conserve]

What sales will be taxed?

Wholesale sales?
Retail sales?
Stocks and bonds?
Services?

This is just as corruptable as what we have now.

What we really need is a new system of law. There are too many laws to be applied fairly.

Proposal: For every new word of law created, two words of law must be destroyed, and for every word of law changed, one must be destroyed. The eventual result? No need for lawyers!

[Amerigomag]

Finally a proposal that taxes both the rich and the poor according to their means and abilities.

California legislators will finally get their diaper tax and their cartridge tax.

SUV owners will pay disproportionally more taxes than will Yugo owners.

The elite will pay taxes on visits to their shrinks and the poor will pay less for their alcohol.

The ironies are amazing.

[Enterprise]

I hope something can be put into law also, that's fair. The present system of confiscating people's hard earned wages is obscene and repressive.

[Remedy]

ping

[Ford Fairlane]

Business-to-business transactions... ...are not subject to the sales tax.

I wonder if this includes farms?

Most states now have a sales tax exemption for anything used in farming.

[Remedy]

ping

[Celtjew Libertarian]

I think this would be an improvement on the current state of things, but there would still be too many problems, IMO. Either we end up taxing things that, IMO, should not be taxed (food, medicine, some baseline level of shelter) or we end up creating a whole new set of complex, too easily manipulated government regulations (OK, should Hostess Twinkies be untaxed as food or taxed as junk food?)

Here's what I would like to see:

Line 1.  Income (Wages, tips, dividends, interest, inheritance, etc.).

Line 2.  Subtract $25,000 from Line 1.

Line 3.  If Line 2 < 0, you pay no taxes.

Line 4.  If Line 2 > 0, multiply line 2 by 0.15.  This is your total taxes.

The only numbers that could be manipulated would be the deduction in line 2 and the tax rate in line 4. There might also be a debate about what was included in line 1 (inheritance, for example). But it would keep things to the basics.

[Osage Orange]

I'm honestly not sure what the real answer is.....This much I do know....the way we are doing it now is better than anything Rube Goldberg could "invent"

FRegards,

[TheBattman]

Something that is completely ignored by the "Fair Tax" crowd - State income taxes. For the majority of us who live in state that collect income taxes, we will get a double shafting because we will pay income taxes to the state based on more income.

Let's also look at the sales taxes many of us are already paying - from 6-9% in regular retail sales taxes, rates as high as 14+% for hotel and travel costs. Add these to the 23% and we see that the tax rate seems rather idiotic -

I just don't see feeling good about picking up a $100 item at the store and getting to the register to find that I owe $132 for the item.

I have an idea - how about a constitutional amendment that prevents any tax increase that outpaces the growth in personal income. That would be a starter.

[Paul C. Jesup]

Chances are most people would probably be willing to pay MORE in taxes in exchange for NOT having the IRS or the equivalent on their backs.

[Amalie]

There is one huge variable - there are still many social engineers in government who will use this to drag Republicans through the mud. Those people (and this includes Republicans as well as Democrats) will continue to use the federal government in ways never foreseen by the writers of the Constitution, regardless of what format the money comes in. While I see is that this may indeed draw some boundries, there will still be people who will twist this around for the benefit of "being good guys" and the general populace will continue to get saddled with immense taxes. H*ll, we've got Republicans who just lowered the boom on the only tax cut likely to get our stock market going again anytime soon; there is no way I would trust them to mess around with the tax system without it doing more harm than good.

Moreover, as others have mentioned, changes in consumption could well hurt this plan. I've seen the thousands upon thousands of dollars that change hands at hobby shows, flea markets, etc. To be effective, the government will have to be much more intrusive (if not now when this passes, later when people in power decide it is "needed) in monitering that activity. My feeling is that somebody selling a vintage hemi Dodge Charger or antique book collection for $25,000+ cash is not likely to be filing that as income unless they have to (I realize that is illegal, but is probably a simple fact of life if the seller is not someone who does of that type of thing full time). Bartering (trading that hemi Charger for another car(s), or an engine rebuild, etc) presents problems as a "transaction" as well. The bottom line - a highly visible sale/consumption tax on new good and services could have a chilling effect on the entire US Economy operate if a lot of business went "underground."

Finally, I think the renewed burden on the states would absolutely raise those rates to 15-25% in addition to what the federal government would collect; then, the issue would be dealing with an even more encroaching local government. The states are already on the ropes; it remains to be seen what they will do to correct thier problems, but they are in no position to continue and have yet another burden put on them. The end result - further contractions of the economy, a slowing of the recovery, and "happy days are here again" Democrats in office circa 1932. Is the level of currect federal government constititutional - no; but practical concerns again make this a very difficult issue to address.

There are no easy answers, but there needs to very serious considerations about every possible effect that would ripple through society as a result of any major change to the present tax plan.

[gcruse]

Bloody excellent.

[gocats]

There are 400 people in Mephis working for the IRS. These people file the returns the IRS recieves in memphis. That is all they do. Eliminating ti=he IRS would save so much money, the IRs is just a waste of recourses.

[ApesForEvolution]

Good news indeed! The majority of people that will be upset by this probably don't pay the confiscatory income taxes but rather take from the government instead. Abolish the IRS/IRS and set the people FREE.

[Remedy]

Posted on 11/08/2001 10:10 PM EST by rwfromkansas

Dear FairTax Supporter,

Tax issues are simmering in D.C., and it's time to bring them to the boiling point.

[Trajan88]

I will explode with happy, happy, joy, joy if this passes.

Trajan88