End of the income tax?

WND ^ | Aug. 12, 2003 | Neal Boortz

[FairOpinion]

It's in the hopper. In the last Congress, the number was HR2525. This time, it's HR25. When I speak of HR25 on my show, the residual phone calls continue for days. When I talk up HR25 during a banquet speech, the deserts remain uneaten.

HR25 is called the Fair Tax Act of 2003, and its stated purpose is "To promote freedom, fairness and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the states.

I've been studying and promoting this idea for nearly 17 years. I've debated each and every possible point and objection, and have almost always drawn the opposing party to my side. HR25 has 32 cosponsors and absolutely no organized opposition. This is legislation that would transform our economy and our society for the better, yet this may well be the first time you've heard of it. It's time to bring you up to speed.

Here are the highlights. If The Fair Tax Act were to become law, the following would happen.

The law establishing the federal income tax would be repealed, both for individuals and for businesses.

A constitutional amendment repealing the 16th Amendment would be sent to the states for ratification.

All laws providing for payroll taxes for the funding of Social Security and Medicare would be repealed.

A sales tax would be instituted on the sale of all goods and services at the retail level. This retail sales tax would replace all payroll and federal income taxes.

Government funding would remain at present levels, and no changes would be made to Social Security and Medicare other than the method of funding those programs.

Does the idea sound pretty radical thus far? Stick with me a few hundred more words.

With the passage of HR25, you would receive 100 percent of your bi-weekly paycheck. If you make $1,000 a week, your paycheck would be $2,000 every two weeks. Of that $2,000, you would only pay tax on the money you spend at the retail level. All savings and investments would be tax free. Any money you spend at the retail level would carry a 23 percent sales tax.

Yikes! Did that man say 23 percent? Yeah, I know. It sounds awfully high, but here are some points you need to consider.

First, there are the embedded taxes on every single product or service you purchase at the retail level. Harvard economists have estimated this embedded tax to be around 22 percent of the cost of those goods. That 22 percent represents the payroll taxes and corporate business and income taxes paid by every manufacturer, shipper, wholesaler, merchandiser and retailer having any connection whatsoever with the product you have purchased. These taxes are all added to the cost of consumer goods.

As soon as these taxes vanish, economists agree that competitive market pressures will immediately cause prices at the retail level to fall. So, we almost have a wash here. The prices decrease by over 20 percent, and you start paying a 23 percent sales tax. Remember, though. You brought home 100 percent of your paycheck, and every dollar you don't spend at the retail level remains untaxed.

But what about the poor? They're not really paying federal income taxes anyway, so this big sales tax is really going to hit them hard, right?

Wrong. The Fair Tax Act provides that no family, rich or poor, will pay sales taxes on the basic necessities of life. The cost of these basic necessities is set at the federally determined poverty level for various sized families. At the beginning of every month the head of every household in America will receive a check, or an electronic credit to their bank account, in an amount equal to the sales tax they would pay on the basic necessities for their sized family. This provision is completely neutral as to income, so class warfare political rhetoric becomes useless.

HR25 has friends in high places inside the Beltway. When briefed on the idea, Vice President Dick Cheney told Congressman John Linder: "This needs to be put before the president." Commerce Secretary Don Evans, after being briefed, asked Linder: "Why haven't you passed this?"

And just why hasn't it passed? Because the idea is so bold that many politicians, while personally praising the concept, just assume it can't pass.

It can pass, my friends. It can pass if the people of America learn the details and then let their elected officials know that they want some action. If you have the slightest interest, just go to the website for Americans for Fair Taxation. Every detail is covered, every question is answered.

If America is now ready to accept the possibility of the Red Sox winning the World Series, we can certainly support an idea as daring as the Fair Tax Act.

[Dead Dog]

Because taxing income makes you a slave.

[Dead Dog]

That is a key reason for doing it. They won't lose power out of popularity, they will lose power by their inability to buy votes and donations with taxbreaks and grants.

[coloradan]

You make a good point. I was merely thinking of the public backlash against rats for opposing it, if Bush supports it and it passes. But you're absolutely right, if the rats lose their ability to make "targeted vote buying" they will suffer for that as well. Then again, Bush is not above targeted vote buying either, Re: senior prescription drug benefit, $110 billion farm bill, etc.

[EternalVigilance]

The big question is, where will the system equalize?

At its natural level.

Alexander Hamilton wrote about this very subject in Federalist #21.

Here is an excerpt:

"Imposts, excises and in general all duties upon articles of consumption may be compared to a fluid, which will in time find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal."

[Veracious Poet]

The only way the IRS code is going to be abolished is if the people revolt against the system.

The system is too indigenous to the Federal bureaucracy and too important to the Federal Reserve shareholders (the richest people in the world) to be changed at this point without something short of a civil war.

If you think Bush is serious about eliminating the IRS Matrix, think again - he is just a lowly prodigy of the financial/political elite.

Moreover, most Americans are sheep to the slaughter and wouldn't get off their couch except for the remote or another beer...

On the other hand, we have the politcal elite, government bureaucrats, as well as the ever increasing numbers of third worlders and those tied to the social entitlement monster in the US that would NEVER want their way of life to be killed.

Cash cows are sacred in America, just in case you didn't know. ;-)

[EternalVigilance]

Cash cows are sacred in America, just in case you didn't know. ;-)

LOL...great line!

I agree with you. The only way we will get it done is if, having reached a tipping point in our decade-long effort to educate the electorate about this issue, the people en masse rise up and demand it.

We're certainly no there yet, but the progress has been steady.

[Badray]

NO FLAT TAX!

The idea is to get the IRS out of our lives. No income reporting. No forms. No audits. Tax expenditures, not income.

It also captures the underground economy because even drug dealers and prostitutes who don't file the 1040 will have to pay the retail sales tax.

When the government has first claim on your income, (thru withholding) whose money is it? It's not their business, or that of anyone else, how much or where you make your money. Legally, that is.

[lewislynn]

Lewie, you still peddling that crapola?

Only untill someone can prove me wrong...Care to try?

[nunya bidness]

Careful, the old guy will come banging in here with his colorful links, pie charts, and dusty overhead projector.

Most telling was watching both Hannity and Colmes castigate Larry Becraft and his client tonight.

Interesting times indeed.

[Taxman]

The revolt is underway.

Here , here , here , and here.

Your participation is urgently needed.

[Judith Anne]

John Gibson had a lady pilot for FedEx on his show yesterday who WON a case against the federal government about withholding taxes--she didn't have any withheld. I can't find any article on the Fox website about it, though I've looked and looked....this is interesting...

[verity]

Pie-in-the-sky!

[Taxman]

Unfortunately, the NRST rate initially has to be "revenue neutral" in respect of the taxes that it replaces. So initially, the rate has to be high.

HST, you are on to a TRUTH! about the NRST: Over time, the NRST rate will come down due to three important factors: 1. economic expansion; 2. increase in tax revenue; and 3. a decline in government spending.

An inexorable (intended!) consequence of the NRST is the economic boom you mentioned.

The econimic boom will generate more tax revenue, exerting downward pressure on the NRST rate.

Less demand for government services is a consequence of an improved economy. If, and only if, the voters insist on limiting government, both the NRST rate and government spending will decline.

HST, absent voter demand for smaller budgets, government will continue to grow, so we must be even more vigilant.

Citizen involvement in the process is vital, and that is where FRee Republic is so important.

Stay tuned as the battle rages into the 2004 election cycle. It is gonna be a fun ride to fundamental tax reform in 2005!

[Core_Conservative]

FUBAR - I don't like the idea of the "subsidy". Take away all taxes on food products (like a great deal of the states already do)

I would have my congresspersons vot against this bill.

[SevenDaysInMay]

Beware the "value-added tax", VAT. Research it well. Politicians love it. Europe's socialisls embraced it long ago.

(Hint: VAT almost looks like sales' taxes, except it is less in-your-face that a sales tax rung up at point of purchase.

Would a car or truck, or second car or truck be subject to the 2X% sales tax? Tools of the trade? Homes? Second homes or land? Stocks and bonds? There is a reason beyond corruption that our federal tax code is a shelf breaker. Our federal "Code's" ("as amended") regs and law are room fillers expanding at increasing rates from my tax accounting - tax law studies 20 y.ago.

Beware keeping spending levels this high, not to mention the recent rates of increases. Our layers of governments spend far in excess of needs simply to buy votes with producers' confiscated money. D.C. fascism, criminally corrupt socialism, is the one incumbant party which controls our federal government.

Why are widely known felonies of high officials so often uninvestigated much less prosecuted? We have grown numb and corrupted from the cover-ups.

Learn the different micro/macro effects of taxing pruction vs. consumption, homeschoolers.

[Dead Dog]

Another point with the NRST is how it would in effect act as a tariff. Finished goods sold in the US would no longer be taxed during production, however, foreign goods may or may not. They would all be taxed 2x% at point of sale. That would mean US produced goods would remain within a couple % of their current price while foreign goods will be hit with the full brunt of the 23%.

The EU and WTO will be the most powerful opposition to this tax, you can count on a trade war (one that we would win of course, just one advantage to a negative trade balance).

[Dead Dog]

American made goods would drop 22% when exported.

[EternalVigilance]

You are correct.

However, the cost of our goods produced here for export would, I think, drop quite a bit.

It's those compliance costs--the costs hardly anyone even thinks about.

Removing the costs from our businesses of complying with the current monstrosity would be a huge boon.

Our products sold in the world market would suddenly be much more competitive, while finally, foreign producers would have to play on a level field in our market when their products are taxed at the point of sale.

The income tax is the root problem in so many areas, and this is a very important one. Thanks for highlighting that fact.

[Dead Dog]

What will be interesting is how the deflationary pressures on wages pan out. The cost of consumer goods will increase, since most of those are imported, so you have both deflationary pressue on wage and inflationary pressure on imported goods. I have little doubt that the equlibrium will result in a net gain in purchasing power, but convincing Joe (Re)public of this will be the final obstical.

IMO the IRS is in it's final decade. That Fed Ex pilot's jury aquital is blood in the water for the IRS.

[EternalVigilance]

IMO the IRS is in it's final decade.

Let's hope so. And work hard to make it so.