MY Letter to Rep. Linder

July 22nd, 2004 | Remember_Salamis

[Remember_Salamis]

Dear Mr. Linder,

I am an avid supporter of the FairTax and have studied the problem quite in-depth over the past year. Americans across the board will benefit from the FairTax National Retail Sales Tax (NRST) -- except for tax lawyers. I often debate the FairTax with friends, both fellow supporters and opponents, and the leading argument against an NRST is the feasibility of enforcing it. Many believe an NRST with such a large tax base cannot be implemented; I tend to disagree.

Recently, I have argued that the best way to get the FairTax implemented would be to prove that an NRST is do-able across such a large tax base.

One way to do this is by transferring payroll taxes to an NRST. Legislation recently introduced by Reps. Sam Johnson (Tex.), Jeff Flake (Ariz.), and Pat Toomey (Penn.) calls for the employee share of payroll taxes (6.2%) to be able to be invested. It is based on the CATO institute plan, which calls for the remaining employer's share to pay for current beneficiaries.

I propose that we convert the remaining employer share into an NRST. Using the base used by the FairTax, it would only need to be 3% or so. Employees will take home the other half and be able to invest it in expanded IRAs. IRA contribution limits are already scheduled to expand to $5,000 in 2008, and we simply raise the contribution level by the amount that would have been sent to the government. We would simply multiply the employee share of payroll taxes (6.2%) x $87,000 (the amount of income payroll taxes are paid on); this would amount to $5,400.

This would make the IRA contribution limit $10,400 per person, or $20,800 per couple. If a couple were to maximize contributions for 40 years with an annual 7% interest rate, the couple will have nearly 5 Million dollars in retirement savings!

Converting 1/2 or payroll taxes into the NRST will (1) make all IRA contributions entirely tax-free (IRA contributions are currently after-tax when it comes to payroll taxes) and would serve as a test-bed for the feasibility of collecting the NRST. We may also want to tack Medicare's 2.9% tax on to the NRST as well.

I believe this idea would enjoy wide bipartisan support. Why? Investors would benefit from the increased IRA contribution limits, and the poor would be removed from the burden of having to pay a regressive income tax. From there on, shifting even more income and corporate taxes into an NRST would be an excellent campaign issue. When all taxes have been transferred over to the NRST, we can then cap it off by sending the 16th Amendment to the dustbin of history with a constitutional amendment.

Despite the benefits of this gradual approach to implementing the FairTax, many FairTax supporters are concerned about ending up with both a NRST and an income tax. That is why it's imperative the legislation restricts use of the NRST for existing programs only, not new ones.

I believe attacking the issue in a gradual, as opposed to a revolutionary manner, will silence a lot of the FairTax's critics. As a bonus, GOP members will be able to add another conservative-libertarian issue to the party platform for the foreseeable future: converting income taxes into sales taxes. I deeply appreciate your efforts to restore our nation to the sound principles envisioned in our countries' founding, such as consumption-based taxation. As a member of the United States Air Force I would also like to thank you for your unwavering support to the Armed Forces and your support of the efforts of freedom around the globe, such as your support for Israeli self-defense.

Sincerely, (Name removed)

[Remember_Salamis]

FairTax Bump!

[smokeyb]

Fair Tax ping

[Badray]

Bump for later.

Thanks for the ping, smokey.