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Comments by Ed Sarlls, III ([email protected])
Congressional District Leader (TX-22) for Americans for Fair Taxation
(www.fairtax.org, 1-800-FAIR-TAX)

Other Tax Reform Organizations:

• Citizens for an Alternative Tax System (CATS)
  The CATS organization supports a national retail sales tax. Their proposal is currently H.R. 1467 (106th Congress, 1999-2000) and is sponsored by Rep. Billy Tauzin (R-LA) and Rep. Jim Traficant (D-OH). [The plan is to re-number this bill as H.R. 2001 when that bill number comes up in the House.] This is the same proposal that was H.R. 2001 in the 105th Congress. At that time it was also sponsored by Rep. Dan Shaffer.

  The CATS proposal has two major differences from the FairTax^SM:

  • Taxes used items differently:
    • FairTax^SM (H.R. 2525)
      • Description:
        • Used items are not taxed.
        • The retail value of a used item will include a portion of the tax paid on the item when it was originally purchased.
      • Advantages:
        • Does not require individuals or businesses selling used items to collect or report sales tax on these items.
      • Disadvantages:
        • Does not tax appreciation in the value of the item.
        • Requires businesses to handle used items differently from new items: track inventory of new and used items separately.
    • CATS NRST (H.R. 1467)
      • Description:
        • Used items are taxed.
        • If the value of the item increased, the tax on the appreciation is reported and the tax on the original basis is retained by the seller (this is the tax the seller already paid).
        • If the value of the item decreased, the entire tax is retained by the seller.
      • Advantages:
        • Purchaser sees comparable prices for new and used items since tax will be added to both.
      • Disadvantages:
        • Seller has to keep track of the basis to determine the amount to submit.
        • Requires businesses to handle used items differently from new items: track inventory and basis of new and used items separately.
  • Retains payroll taxes:
    • FairTax^SM (H.R. 2525)
      • Description:
        • Eliminates all payroll withholding.
        • Funds Social Security and Medicare with the same amount as a dedicated portion of the sales tax collected.
      • Advantages:
        • What you earn is what you take home.
        • Removes hidden tax in retail prices for employers portion of Social Security and Medicare payments.
        • Eliminates the most regressive tax we have. The tax that hits lower income families the hardest.
      • Disadvantages:
        • Touches Social Security.
        • While not changing the amount of funding, the mere fact that something related to Social Security changes gives opposition an opportunity to use scare tactics against us.
    • CATS NRST (H.R. 1467)
      • Description:
        • Does not change withholding for Social Security and Medicare.
      • Advantages:
        • Does not touch Social Security.
      • Disadvantages:
        • Retains paycheck withholding.
        • Retains the most regressive tax in our system.
        • Retains a hidden tax in retail prices.

• The Cato Institute
  "Promoting public policy based on individual liberty, limited governments, free markets, and peace." Favors a national sales tax.

• Citizens for a Sound Economy (CSE)
  CSE has sponsored the "Scrap the Code Tour" debates between Congressmen Billy Tauzin (R-LA) (Sales Tax) and Dick Armey (R-TX) (Flat Tax). CSE prefers a flat tax.

• The Heritage Foundation
  "Committed to rolling back the liberal welfare state and building an America where freedom, opportunity, and civil society flourish." Favors a flat tax.

• Americans for Tax Reform (ATR)
  Largely focused on lower taxes rather than the means of collecting them.
  • Growth, Prosperity, and Honest Government: The Case for Constitutional Tax Limitation by James H. Perry, Americans for Tax Reform, (policy brief, not numbered or dated, printed Apr 1998).
    This article outlines the case for a constitutional amendment requiring a two-thirds majority of congress to raise tax rates. This refers to the bill sponsored by Congressman Joe Barton, et al.
  • Tax Presentation, Americans for Tax Reform.
    This presentation lists the amount of tax included in the retail price for common items ranging from a loaf of bread (31%) to airline tickets (40%). In 1998 this was once located at: http://www.townhall.com/atr/tax-presentation/. It appears to have been removed from the ATR web site. If anyone knows where it has been moved to, please let me know.

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Visitor Number since 15-Apr-1999.          Updated 16-Jul-1999.
� 1999 Ed Sarlls, III ([email protected]) Comments invited.
Opinions expressed here are my own and do not represent my employer, geocities or Americans for Fair Taxation.