I am in total agreement with Floyd Dominick’s In My View piece regarding subsidies, the income tax code, and the demise of socialist and Democratic governments. His suggestions for the tax code changes are noteworthy, and if that is the best we can do, I support those changes. However, the ultimate overhaul would be eliminating income taxes completely.
Think that is just a pipe dream? The Fair Tax Act of 2011, in the form of H.R.25 and S.13 has already been written with the help of knowledgeable economists and currently awaits hearings in the House and Senate. It would establish a flat-tax type of tax on consumption rather than on income. Seventy representatives and eight senators have signed on as co-sponsors of this legislation.
The Fair Tax Act has been studied and critiqued extensively. Simply put, the average American taxpayer spends about 30 percent of income on taxes, including income taxes, payroll taxes, capital gains tax, Medicare medical insurance withholding, and corporation taxes (via the price of goods). All of those are eliminated by The Fair Tax and replaced by a 23 percent tax on purchases of new items and services. Therefore, even if all of one’s income were spent on new items, the tax rate would still be seven percent less than now. And one can eliminate taxes altogether by just buying a used item or keeping what is already owned and not replacing it. Our consumer-driven, throw-away society needs to consider this conservation-oriented, sustainability-driven change.
With The Fair Tax there is no withholding from one’s income, and best of all, no filing income tax forms on April 15. The Fair Tax incorporates relief for low income families in a fair, nondiscriminatory way by returning taxes on necessities to everyone (in advance in the form of a “prebate”). Dissenters have said it favors the rich, but economists disagree. The Fair Tax is revenue neutral by design compared to our present system and replaces the missing 7 percent by expanding the tax base. For example, it taxes foreign visitors, the underground economy and others who utilize tax avoidance and tax evasion schemes. To mention a few (there are many more) other benefits: jobs return to America because the corporation tax is eliminated; the price of goods should fall in proportion to the absent corporation tax; $300 billion per year will be passed on to consumers when businesses are freed from hiring accountants and lawyers to prepare business tax returns (and/or to develop tax avoidance schemes); everyone pays because merchants collect the tax at the time of sales, and the rate is the same for everyone (a flat tax).
There are certain to be unintended consequences of this legislation, but how could they possibly exceed the unintended consequences of the current 73,000 page tax code with all of the exemptions, exclusions, deductions and special interest group favoritism contained therein.
Almost everyone can think of a scenario wherein The Fair Tax will cost them more in the short term. However, almost everyone will gain in the long term when the economic stimulation of returning jobs and reduced taxes takes effect. For the overall good of the country, we must be willing to give up a few short term benefits in order to reap the rewards of a much better and fairer system of funding government. The selfishness of special interest groups, some politicians in positions of power and persons who presently benefit from the present complicated tax code will do their best to prevent tax reform. We need to take a united stand against them and take control of our own financial lives with The Fair Tax. See fairtax.org online and click “Enter Site.”