How many of you have tried to get information from the IRS, only to either not get through or to get bad information? How many of you have gotten too much taken out of your check and all you can do is wait until next year to get your money back without interest? How many of you believe that we can have a more efficient tax system? How many of you don't even UNDERSTAND our current tax system? My guess is is that most of us can answer 'yes' to at least one. I can answer yes to all four. However, there is an answer. It is called the 'Fair Tax'.
I am proud that my Congressman, John Linder, is leading the charge to bring true reform to our tax system and eliminate both the IRS and the Sixteenth Amendment to the United States Constitution. Though I will move to Johnny Isackson's district in five weeks, I will still be totally behind Congressman Linder and his effort to free the American people.
What is the Fair Tax? Simply put, it is a national sales tax. All federal taxes would be eliminated. The income tax, gone! FICA taxes, gone! Payroll taxes, gone! Corporate income taxes, gone! Imagine that, a day when a dollar earned is actually a dollar paid. Imagine a day when you get every dollar you earn at the end of each pay period. With the Fair Tax, this will happen.
It is estimated that a 23% national sales tax will be needed to provide current services (though there are some of us who would like to see both come down). Before you say, woah, a 23% sales tax, consider the following. Everytime you go and buy something in a store, you are paying taxes. Yes, you pay taxes. You pay the embedded taxes that the business owner is responsible for. You don't really think that businesses eat up the corporate income taxes, payroll taxes, and the other miscellaneous taxes they fork over to the Imperial Federal Government? Of course not. They pass those taxes on to us. Harvard economists have estimated that 20-25 percent of the purchase price of each and every item we purchase is embedded taxes. In other words, for each dollar you spend, 20-25 cents are the taxes the business pays. Except, you really pay it, not the business. Now, take an item that is now 100 dollars. Take out the embedded taxes and the same item is now 75-80 dollars. Take on a 23% tax to that, and you are paying about the same you did before, except that you took all of your money home to begin with. Sounds like a win-win proposition, doesn't it?
It gets better. Aren't you in the least disturbed that the government, though the IRS, knows how much money we earn, how many children we have, who we share an abode with, what our investments are, and what our profession? The IRS is used by the government to collect information on us. Gee, imagine if our Founding Fathers came back and got wind of this. YIKES. Not even the government of the People's Republic of China does this. And we call THEM Communist? Well, with this system, there is no more IRS. We don't have to tell the government how much we make, who we work for, or what we do. Why should the government know all of this? No one has ever given me a good reason for this kind of government intrusion into our private lives.
Many liberals have commented to me that this tax is unfair to the poor. This is far from the truth. It actually benefits them, and does so in two ways. 1) FICA taxes are eliminated. Lower income people pay more in FICA taxes than they do in income taxes. Well, with the fair tax, FICA taxes are done away with. Gone. They get that 7.6 percent of their earnings back. Nice huh? 2) There is a provision in the tax plan that you don't pay tax on necessities. How is this figured? It is based on the poverty level. Say the poverty rate for a family of four is 19,000 dollars a year. You take that 19,000 dollars and multiply that by 23% (or whatever the tax rate is). You then divide that by 12 and that is the monthly refund check everyone will receive from the government. What happens. If you are at the poverty line, all of your tax is refunded to you. You literally pay nothing in taxes. Now, you aren't paying an income tax, but you are paying FICA taxes. Good deal, huh?
There is yet another benefit. It will make us more competitive in the international market. We moan about how we have a massive trade deficit with countries like Japan and China. Have we ever considered that our tax structure actually hampers our industries and businesses in international competition? If we tax the consumption rather than the production, the embedded taxes that American corporations must add to their costs on exported goods will be gone. That will reduce the cost of American goods overseas. U.S. companies can't just reduce them because it is against global trade rules to sell a product in a foreign market for less than it sells in your home market. The same international rules protect our companies when we do change our tax structure by preventing selective tariffs to compensate for lower American costs. More exports, lower trade deficit and more American jobs. Wow, what a system.
Why then do the Democrats oppose it? The same reason Democrats oppose any measure that takes power away from government, they are the party of big government. They are not bothered by the government having all of this information on us. They want the government to have even more control over our lives. They seem to act as if our lives belong to them and their precious big government. They also seem to believe that all of the money belongs to the government and that we ought to be grateful for every penny the government allows us to have. What other rationale could there be to support the current tax system that even tax attorneys can't understand. Why else would anyone oppose the Fair Tax? Call your Congressmen and tell them to support H.R. 2525, the Fair Tax.