10 April 2005

The Fair Tax Is Gaining Momentum

I received this in an email.
In our view: Fair tax support building
"The FairTax plan continues to draw attention on Capitol Hill as a replacement for the cumbersome, overly complex U.S. Tax Code. If Rep. John Linder, R-Ga., can convince enough of his colleagues in the Senate and House, Americans would begin paying a 23 percent national sales tax — meaning that instead of giving 23 percent of every $100 earned to Uncle Sam, they would contribute 23 percent of every $100 they spend. Gone in a blink of an eye, or at least the stroke of the president’s pen on such a bill, would be the IRS, millions of tax forms, legions of tax preparers who are required to interpret the unfathomable 55,000-plus pages of the code and many, many lobbyists whose jobs depend on getting tax breaks for their clients. Is the nation ready for such an upheaval? Absolutely, if you ask the Joe and Jane Does who dutifully pay their taxes and don’t find too many credits lying around to protect their money. Definitely not, if you are a member of an industry that has grown up and expanded around the massive tax code. Columnist George Will notes that Linder’s plan would treat “all goods, imported and domestic,” equally “at the checkout counter, and all taxpayers — including upward of 50 million foreign visitors annually — would pay ‘as much as they choose, when they choose, by how they choose to spend.’” Will speculates that by abandoning payroll and corporate taxes, “America would become the only nation selling goods with no tax component — such as Europe’s value added tax — in their prices. With no taxes on capital and labor, multinationals would, Linder thinks, stampede to locate here, which would be an incentive for other nations to emulate America. ‘This,’ Linder says, ‘would unleash freedom around the globe.’” Dr. Dale Jorgenson, former chairman of the economics department at Harvard University, has projected a 10.5 percent growth in the gross domestic product the first year of a FairTax. As for the poor, they would receive an advance monthly rebate (called a prebate) to cover purchases of necessary goods and services up to the poverty level. The beauty of the FairTax plan is that everyone contributes a certain percentage. There would be no noncompliance since the tax is collected on sales and services. There are 54 co-sponsors of Linder’s bill. If the plan doesn’t get a full hearing on Capitol Hill this year, perhaps it will come in 2006. Support appears to be building. " What isn't touched on is the money that is currently spent in our economy that is basically earned tax free. Drug dealers don't pay any taxes on the money that they earn. But they do spend it. Illegal aliens who are working under the table don't pay taxes, but they spend the money that they make. Organized Crime don't pay taxes on their earnings, but they spend the money that they make. These are just a few places where there is hidden revenue that the Fair Tax could tap into. Not that these types of "industries" would be condoned, but they would no longer be tax exempt "industries". Another item that isn't touched on by this email, Social Security Reform. By eliminating the need for the IRS and the paperwork mountain that the government pays for, the money saved through their elimination could be diverted to offset any budget shortfalls in a transition from the current Social Security system to whatever replaces it. And yet another item is relief. The stresses of the April 15th deadline each year would relieve the masses. No more tax headaches, no more ads for H&R Block, no more paperwork, no more giving the government an annual interest free loan. And to top it all off, our jobs would come home. This plan would make the United States not only home to the best made products in the world, but cheapest. By eliminating the costs of employment and business to business sales, it would make it more attractive to businesses to be located in the good 'ol USA.
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Blogger John said...

Excellent post! I'm all for it! You'll find no argument from me! Let's get this done. The sooner, the better!

4/10/2005 12:58:00 AM  
Blogger Unadulterated Underdog said...

Good post! Unfortunately, I don't think this would work quite the way you think. I certainly think a tax code simplification could be helpful but consider how costly it would be to implement changes. For one thing, the government would be switching from having an exact dollar figure to an estimated dollar figure. Think about it like your own checkbook. Is it easier to balance and plan when you know how much you will have or when you only have a guestimate? That's the way to look at it friend. Good blog though. Cheers and drop by my site whenever you like!

4/10/2005 04:32:00 AM  
Blogger Gribbit said...

Ok, thank you for reading. I would however suggest that you read the details of the plan. This was just a press release from the orgaization that I got via email. You can check the details of the plan out at http://www.fairtax.org

4/10/2005 04:43:00 AM  

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