Posted on 09/27/2004 2:41:31 PM PDT by LowCountryJoe
The most popular of the various national retail sales tax plans is called the FairTax. It is in both houses of Congress today as HB 25 and SB 1493. It is a replacement, not an add-on, for the federal income tax and for federal payroll taxes collected to fund Social Security and Medicare.
The FairTax provides a dollar-for-dollar replacement of all revenues now collected through such taxes and eliminates the need for annual and quarterly income tax filings, the surveillance by the federal government of wages and investment income and the need for anyone to hire an expert in order to comply with federal tax laws.
The FairTax is a progressive tax. The biggest-spending wealthy will pay an effective tax of $23 for every $77 they spend on new products and services. The poorest get money back. American families would receive a monthly refund equaling the amount of sales tax a poverty-level family would normally pay.
As such, the FairTax eliminates federal taxes on the poor, including highly regressive Social Security taxes. This automatic refund won't mean much to the wealthy but will be quite significant to low- and moderate-income families and to those on fixed incomes. Everyone receives the refund, including the wealthy, in order to eliminate both means testing for the poorest Americans and the need to track earnings for everyone.
The FairTax has no exemptions, no shelters and no complex tax dodges available primarily to the wealthy and special-interest groups. The only thing every taxpayer can know about the current tax code is that it is an 8-million-word mess that no one has ever read. But even a child can understand the 13 words that define the FairTax: "The FairTax is applied to all new goods and services delivered at retail."
The FairTax captures billions of dollars of revenues currently lost in the underground economy. Even drug dealers would pay their share of taxes when they purchase goods and services. The simple fact is, the more money one spends under the FairTax, the more consumption taxes one pays. Those who buy luxury items pay more; those who live more modestly pay less.
The FairTax also eliminates the IRS' unwelcome surveillance of every penny of income earned, loaned, won or invested by American citizens. In place of the huge bureaucracy created to collect federal taxes, the FairTax uses the states' sales tax infrastructure to collect taxes at the point of retail sale.
The intrusive interest from our government into citizens' financial status is eliminated overnight.
We can achieve the dream of upward economic mobility for all if we first believe our goal is attainable. The FairTax — truly an issue that delivers on the promise of individual liberty — will survive the distortions of presidential politics, and with a demanding public, the FairTax will achieve the congressional passage and a signature from the White House. It all starts with telling the public the truth and believing we can change things. I believe.
• Herman Cain also has served as chairman of the Federal Reserve Bank of Kansas City and as CEO of Godfather's Pizza. He recently ran for the U.S. Senate from Georgia.
you guys don't understand. The "rebate" is just a payment that goes out to everyone regardless of income. So the Kerry's will be getting it too. Sure sounds horrible that everyone will be getting a check but if you do the math it works out well.
Under the current system tax cheats pay no tax, under the fair tax everyone pays. This will help with illegal immigration. Under the current system income is often taxed multiple times. The fair tax would eliminate the IRS and replace it with I don't know, maybe 20 people? There really aren't any downsides.
... what are you talking about?????? this makes no sense, it is simply class warfare in reverse, you should want to see all tax rates reduced
Actually the statement that the drug dealers would pay is correct. They would, of course, pay on sales of legal retail items, not hard street drugs. You can say the same thing about the subterranean economy: illegal aliens, black market, etc. I've heard estimates as high as $1.5 Trillion a year in subterranean economy that goes untaxed.
It's better because it gets the government's nose out of every single transaction that you make. They still collect their money, but they don't know every single damn thing you have ever bought or sold, for profit. All those IRS examiners - gone.
The IRS employees would go to work for the states and the government would collect an additional 30% for all of it's purchases PLUS 30% on all government employee's salaries wages and benefits...no government cost/spending reductions or sales tax rate reductions there.
That is not part of the fair tax proposal. To learn more about the Fair Tax go here.
I realize that understanding satire is difficult sometimes.
fatcats aren't the problem. The great number of homeowners who claim interest and real estate taxes would scream.
Explain....
Don't you pay sales tax when you purchase goods regardless of where you got the money or do you just refuse to pay it by saying this money was earned illegally and I don't have to pay tax on it.
Statement of John G. Wilkins, Managing Director,
Barcroft Consulting Group, on behalf of National Retail Federation
Testimony Before the House Committee on Ways and Means
Hearing on Fundamental Tax ReformMr. Chairman and Members of the Committee:
I am managing director of the Barcroft Consulting Group and I am here on behalf of the National Retail Federation. My statement reports on the findings of a study undertaken by PricewaterhouseCoopers ("PWC") for the National Retail Federation Foundation. I was principal author of that study, which examines the economic impact of substituting a national retail sales tax ("NRST") for the federal income tax.
~~~SNIP~~~
Conclusion
If a NRST is enacted, the U.S. economy would lag behind for at least three years and employment would dip by more than one million jobs. Beneficial effects would not be felt for at least five years after adoption. While it is admirable to seek a fairer and simpler tax structure to replace the incredibly complex income tax code, trading an income tax in for a national sales tax is an experiment that could bring serious harm to a flourishing national economy. Uncertain long-run benefits are far insufficient to risk the short-run setbacks in virtually all sectors of the economy.
She latched on to this NRST idea and blamed the Republican's for trying to raise taxes on the working class by instituting a 30% NRST. She claims it would provide a windfall for 'Big Business' and corporations that would be paid for by middle Americans.
The big problem with her harangue was that she NEVER pointed out that this sales tax would be in lieu of a federal income tax. She went on and on trying to make it sound as scary as possible while not once revealing the other side of the equation. It was classic 'Rat smoke and mirrors.
Thank you... That was exactly my point.
Much of the drug money moves out of CONUS; to Colombia, Asia, etc.
There is no accounting or tax going on in the regions from where the drugs originate.
Cool. Let's pass the sucker in the second Bush term.
The sky is falling and there you are without your umbrella.
Suddenly used goods will be preferred.
I think this is a great idea and hope it passes but I see a few problems. Not only will IRS employees be out of work but HR block will tank, franchise owners of tax services (Jackson Hewitt, etc) will be sol, and all those independant accountants wll be left with no customers. Some effort to reintegrate them into other careers should be made and stock holders of tax prep companies better sell now. I also think there should be some exceptions such as prescription drugs.
The big problem with her harangue was that she NEVER pointed out that this sales tax would be in lieu of a federal income tax.
I hope they all come out and do that. Let them carry on. Get them all to take that stand. Think about it, exposing their deceptions would be a walk in the park compared to exposing Rathergate/memogate. And you know how seemingly easy that occurred.
Ummmm, under FairTax, the working poor would get rebates. Everyone would get rebates. And anyone working would get to take home 100% of their paycheck so it amounts to about a 12-25% raise in everyone's takehome pay.
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