The Fair Tax Proposal

What is the Fair Tax Proposal? Well, it is a proposal that acknowledges that Americans today are taxed far, far too much. This extortion has been going on since 1913 when the income tax was ratified, and it has been slowly but surely getting worse all the time since then. The Fair Tax is a way to end this nightmare.

Now, it's not that Americans mind paying their taxes--if they are for a just cause and purpose. One of the major issues that founded this nation was "taxation without representation", and today's TEA Parties are a new manifestation of that same old issue. We are an oppressed people, and it's time that it ends.

Years of in-depth research have proven that Americans want six things in their tax code:

An easy to understand and user-friendly system of tax payment
A tax system under which everyone is treated the same, regardless of any level of income
Transparency--every nickel of paid tax money should be readily and easily accounted for
A compassionate tax system which ensures that the poor are sheltered from paying much, if any, tax
An unchanging tax system that is, thus, free from the effects of any lobbyists seeking special treatment
A "harmless" tax system which does not keep anyone down or discourage advancement, investment, or saving

Our current tax code gives us absolutely none of these things.

No-one, including accountants, tax lawyers, and IRS agents understands our current tax code. Annual tests by "Money" magazine have demonstrated that if you give a typical tax return assignment for a family of four to 50 different accountants and tax return specialists like H&R Block agents, you'll get 50 different calculations--and about 60% of all adult Americans are so baffled by the tax code that they feel compelled to hire somebody else to do their taxes for them.
It is possible to get money back if you have not paid any income taxes or aren't required to pay them. On the other hand, if you make at least $28,000 a year, you are in that group of Americans which pays 96% of THE GRAND TOTAL of federal income taxes every year. And then, the richest 10% of Americans can exempt themselves from taxes in all kinds of ways that others can't--but, they still pay 70% of THE GRAND TOTAL of all federal income taxes by themselves. Indeed, "the more you make, the more they take". Furthermore, research in 2002 concluded that if you are small business owner, you have to pay $742 in compliance costs for every $100 you have to pay in federal income taxes.
Most people cannot grasp the fact that businesses never have and never will pay taxes. Whenever businesses are taxed more, they do one of two things: they pass on their taxes in the form of raising their prices to consumers; or they go out of business and no longer provide the products, services, and jobs that benefit Americans. There is also a third thing that American companies do: move overseas (and take lots of jobs with them), where they don't have to pay the ridiculous 40% corporate tax. By the way, payroll taxes are paid for by employees; if a business wasn't forced to pay those taxes, most employers would give everybody a raise immediately.
There are 40 to 50 million American adults who are deemed too poor to pay any federal income tax, and they can get a tax refund regardless of that. But, what nobody talks about is that these people still pay close to 25% of their small income in taxes--for they must pay for all of the embedded taxes that are in the prices of goods and services, which are there because, as mentioned above, the government forces businesses to pay exorbitant taxes.
Our tax code, which takes in excess of seven million words to spell out, changes constantly--because not only is Congress always looking for a new way to tax us, but there are also hoards of PACs (political action committees) on Capitol Hill who spend all their time throwing money at lawmakers to get special tax rules in place for their client companies. Why do companies seek these special tax rules? Because the government has given them what is known to economists as a perverse incentive: they feel pressured to seek to minimize their own tax burden while seeking to maximize that of their competitors.
Our tax system punishes wealth creation; it punishes investment; it punishes savings; it punishes passing on what you have earned to your children and grandchildren; it discourages Americans from having more children; it drives American companies out of America; and it discourages foreign companies from doing what all of them say they would otherwise do: put offices, and therefore create jobs, in the United States.

Our current tax system is perverse in all ways. But, what would the Fair Tax be like?

How the Fair Tax Would Be Fair?

If the Fair Tax is put into place, we will banish all current income, corporate, payroll, estate, gift, sales, and self-employment taxes. Only tariffs and excise taxes would otherwise remain, and they would simply be reflected in the prices of consumer goods and services.

The Fair Tax is more appropriately called a Consumption Tax. Savings and investments would no longer be taxed even one penny. You as a consumer would pay only one tax, and you would pay it only when you purchased a new product or service. You would pay for it at the point of sale, just like a state sales tax, but it would always be the exact same rate for everything--nothing about it would be mysterious. Only businesses would fill out tax forms, and they would only be one page long.

Estimates on how much this consumption tax would need to be in order to run the government vary from 23% to 40%, all depending on assumptions about how much of the current federal government we can get rid of. But let's take 23% as our example, since we also want to see the federal government bureaucracy cut down to size. Let's say that under today's tax code you want to buy a stereo that costs $100. When you to the store, you have to pay that plus whatever the local sales tax is. Let's assume it's 6%. That means the stereo you want costs you $106.

Now, how much would that very same stereo cost you with the Fair Tax system instead? We know that today, approximately 50% of the price of a product is embedded taxes. So, now the $100 becomes a $50 stereo, since none of those embedded taxes exist anymore. In addition to the $50, no matter where you buy the stereo, you will have to also pay a 23% consumption tax, which here comes to $11.50. So, the stereo that today costs you $106 would now cost you just $61.50--saving you $44.50--a 42% savings.

Imagine if, for every $100 you have to spend today, you only had to spend $58 to get the same things. That means that for every $10,000 you have to spend today, you would only have to spend $5,800 with the Fair Tax in place--and it would not matter if you are rich or poor. In our example, even if the consumption tax were 40%, you would still pay just $70 for today's $106 stereo. For every $10,000 you spend today, you would need only spend $6,400 with a 40% Fair Tax system in

Research has concluded that a Fair Tax like this would save Americans $2 TRILLION every year just in the form of lowered prices. Much of that additional money would go into investments and interest-earning accounts like a money market account--and since investment earnings and savings interest earnings would not be taxed at all, Americans would be making even more money as they spent even less on things they needed.

The Fair Tax encourages and rewards thrift, investment, and wealth-creation. It discourages profligate, thoughtless spending and living off of money that you don't have (such as credit cards).
Businesses would be rewarded for expanding and adding jobs. Foreign businesses would flock to America and create yet more jobs.
Just about everyone's income would go up, since nothing would be deducted from their paychecks and businesses could afford to give raises in order to stay competitive, and those who make a living as investors would not see their incomes cut down to size with capital gains and "progressive" income taxes.
PACs would have nothing to do and would therefore vanish.
There would also be a compassionate exemption worked into this consumption tax. It would apply to everyone, rich and poor, but nobody would get any more or less or unfair exemption. Advocates of this tax system generally feel that a $5,000 exemption should be given annually for each and every American--including children. A minor child's exemption money would go to that child's parent or guardian--so that having and adopting children would now be encouraged instead of punished. So, since this tax is collected at the point of sale, the exemption would have to come in the form of an annual $5,000 check from the government. Therefore, a family of four would receive $20,000 each year from the feds--even if both parents are out of work.

Of course, the Fair Tax does away with the current debilitating and absolutely unfair Welfare State in America. But with fairness like that described, who cares? Only one group would care--the mad Libs, who want something for nothing at all. They would be forced to work more to get more, and they would no longer have any method for extorting money from those who work harder or smarter than they do. Their power trip would be largely deflated, too. Imagine that!

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