Posted on 04/19/2007 1:55:56 AM PDT by Man50D
The following is an address I plan to deliver on the House floor this evening regarding Tax Day.
Madam Speaker, many things change from year to year. Tax Day, however, is an exception. Every year, millions of Americans send much of their hard-earned money back to the federal government. Because of the numerous complexities that have become the U.S. tax code, many virtually need an accountant, and others just send in a large check out of sheer frustration, hoping to figure out the right number later on.
What is fair about our current tax code? Absolutely nothing. Is there a better solution? You bet. One answer can be found in the form of the Fair Tax, and it is a solution that helps Americans keep more of the money they earn and creates a more equitable system of collection. In short, the Fair Tax eliminates our current broken tax system and replaces it with a national sales, or consumption, tax to be administered by the states. When a hard-working American receives his paycheck, he actually gets to take it all home. Gone, too, are the estate and capital gains taxes.
I applaud Congressman Linder of Georgia for continuing his strong push for his bill H.R. 25, the Fair Tax Act of 2007. With its enactment, the national sales tax rate would be set at 23 percent beginning in 2009, at which point Americans would no longer be afflicted by the current tax system. Gone would be personal and corporate income tax, the gift tax, taxes on social security and Medicare, and even the infamous alternative minimum tax, which is estimated to hit 19 million Americans in 2006, a figure that could easily double in the next few years if nothing is done. In the case of the Fair Tax, the only people that pay more are those that choose to spend more.
Currently, and in part due to the tax cuts passed under the Bush administration, there are many valuable deductions in our current tax code that are fair and serve a good purpose. On top of the overall savings provided by the Fair Tax to the consumer, it would also permit exemptions from the tax for property or services purchased for business, export, or investment purposes and for state government functions. Nonetheless, this pro-family legislation allocates a sales tax rebate for certain families, based on family size and income. Every family would receive a rebate of the sales tax on spending up to the federal poverty level, plus an extra amount to prevent any marriage penalty.
Another important aspect of this bill is the provision to let the individual states choose how to administer the collection of consumption tax and redirect that funding back to the U.S. Treasury. Many states already have a sales tax, and so the existing state tax authorities will essentially carry on as before without the need to create additional bureaucracies. This system will also be instrumental in eliminating the "tax gap" that exists under the current system. Instead of the Internal Revenue Service waiting on taxes owed, with billions uncollected every year, the Fair Tax is collected at the point of sale. Once the Fair Tax is in place in 2009, funding to the IRS would be eliminated after fiscal year 2011, with taxes directed through a Sales Tax Bureau. Gone would be the days of the IRS spending millions of tax dollars each year just to track down uncollected taxes - the IRS itself would be gone.
Good luck
Money is power, power is control. You think for one minute the fat cats up in the Senate are going to give up the enforcement arm of government like the IRS?
SInce they expect everyone to get 100% paychecks, there won't be a huge lowering of labor rates-- maybe 7% less.
If I repair someone’s computer or fix their car and get compensated for it, am I supposed to charge the tax?
Yes, if it is a personal computer or personal vehicle-- no tax if they claim it is a business computer or business vehicle. Same for plane tickets, office supplies, hotel rooms, restaurant meals, gasoline, auto repairs, tolls, promotional giveaways, postage, any anything else that could have a potential for business OR personal use. Does that seem like a big loophole? Does anyone think that will be exploited to avoid a 29.87% (or higher) sales tax?
And what happens when sales are moved from taxable to non-taxable in the FairTax bill? That's right, the sales tax rate is increased to make up for the shortfall...
but as each one of is our own little business, does that not open us up to gov’t intrusion as we provide any goods or services to anyone else?
Bingo, there will have to be FairTax enforcement agents and they will still have teeth...
The FairTax won't work as advertised. Simple as daylight.
I’m not saying that it can’t or won’t work, there are just so many ramifications of so fundamentally changing the way we do business. The way we do business is changing rapidly already. If the tax were solely on material goods I could step further on board.
With our increasingly service based economy, I think it opens each one of us up too much to federal accountability as service providers. I think though that the NRST would make the US more amenable to producing goods here, so it could come out even. I’d like to see the services angle discussed more.
I guess I should take it up with Boortz or the FairTax folks. I think tax reform is crucial, I want to make an informed decision.
Another concern I have is that all the people receiving entitlements (Medicare and Medicaid, ...) will still be getting them under the NRST. Thus the 23% inclusive rate. How do you determine the market rate of a government benefit?
Boortz doesn’t understand what he is talking about most of the time, he is an entertainer who used the FairTax issue to get a NYT #1 Bestselling Author title next to his name. The book is full of inaccurate and misleading statements. In the 2nd Edition, they made over 100 changes but many mistakes and rosy pipedreams remain.
And the worst part is that the rank and file still believe the “Keep 100% of your paycheck and prices will stay the same” mantra— nothing but a FREE LUNCH call to action.
Your idea of not taxing services would require the rate to be at least double (60%+ when expressed as a sales tax) on goods. The base would be reduced too much.
The problem is almost $2 trillion dollars in tax receipts is a large number to get out of the economy without a very rigid and powerful collection/enforcement appartus behind it. People only pay income tax voluntarily because of the reporting by third parties— employers and financial institutions, take that away and collection rates would plummet making the burden higher on the honest people.
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