NorthFultonTimes

What is this FairTax thing I keep hearing about?
The FairTax Plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including:

• A progressive national retail sales tax.
• A prebate to ensure no American pays federal taxes on spending up to the poverty level.
• Dollar-for-dollar federal revenue neutrality.
• Repeal of the 16th Amendment through companion legislation.

Huh? What exactly does this mean?
. If signed into law today, it would call for:

• The elimination of all federal income taxes for individuals and corporations
• The elimination of all federal payroll withholding taxes
• The elimination of estate and capital gains taxes
• The repeal of the 16^th Amendment

Whoa! Sounds good! But wait, how do we pay for all the things the federal government pays for with our taxes? 
The costly, oppressively complex, and economically insufficient taxes would be replaced with a progressive national retail sales tax called the FairTax Plan.

Yeah, I’ve heard of flat taxes and national retail sales taxes before – and the government has looked at them and said they won’t work.
The FairTax is a personal consumption tax carefully designed to capture the benefits of a national retail sales tax while minimizing the potential shortcomings of other plans. While similar plans have been evaluated and deemed inadequate, the FairTax Plan is unique – not to be confused with other plans, and those who have studied the FairTax Plan are being added to the grassroots movement everyday! The FairTax is simple, transparent, and fair – and what more can you ask for?

Isn’t that the one that would mean we would pay a higher sales tax (around 23%) on everything we buy?
While critics contend this is the downfall of the FairTax Plan, the truth is that those costs are already embedded into the cost of the products today. When a company pays payroll taxes, corporate taxes, and taxes on the materials it buys, as well as managing the costs of tax compliance – those costs are all passed on to the consumer through higher cost for the finished product. Without these, the costs go down – and yes, the FairTax then adds them back in. However, not only do the costs eventually even out to be the same (or lower) than they were under the current system, but more importantly – you have your FULL paycheck to use to make these purchases! No taxes taken out – if your boss says you make $10 per hour – you’ll GET $10 per hour!

Isn’t this just another way to let the rich guys keep all their money?
On the contrary, Under the FairTax, Thurston D. Billionaire IV will pay his full fair share of federal taxes. Unlike the current system, which taxes dividends and capital gains at a much lower rate than the money earned by secretaries and teachers, the FairTax taxes existing wealth, when spent, at the same rate as everyone else. America's billionaires will also have to scrape along without special treatment in the tax code wheedled by expensive tax lobbyists and granted by compliant Congressmen. (www.fairtax.org)

But how is this plan for the poor? Isn’t our economy in bad enough shape already?
Because of the “pre-bate” to all households for federal sales tax on basic necessities, the burden of federal taxation on the poor is removed; and those who need every penny the most actually get it – since their paychecks won’t be taxed first by Uncle Sam.

As for the economy, those who have studied the FairTax Plan say it will HELP the economy in many ways. The FairTax Plan would:

• Encourage foreign investment in the U.S.;
• Keep more U.S. companies and jobs here in the U.S.; and
• Increase savings and investments, among other benefits.

I’m the guy in the middle – does the middle class get a break with the FairTax?
Absolutely – in fact, noted Boston University economist Laurence Kotlikoff illustrated this point in his article “The FairTax and Middle Americans – A Case Study.” He says the middle class wins with this plan, and that the only ones who pay more are the “the super wealthy.”

A Growing Grassroots Movement

As the FairTax grassroots movement continues to grow, so too will its critics. Most of these simply have not done the math, or haven’t done it right, or haven’t read the FairTax Plan at all. For those who truly want to understand this plan in an easy format (no legal language or economics degrees required) – read “The Fair Tax Book – Saying Goodbye to the Income Tax and the IRS.” To answer critics and clear up some misunderstandings about the plan, this book was recently followed by “Fair Tax – The Truth: Answering The Critics” – available as of February, 2008. 

If you think you already understand the FairTax but have some concerns, buy this book (only about $8 on Amazon.com) and go directly to Chapter 10 – this covers all the “good” criticisms – some with a grain of truth that can be explained and others with some truth whose downside is far outweighed by the benefits of the FairTax.

This latest book also includes what is probably the best summary of what the FairTax is all about. It is included as part of the open letter sent to the president and Congress by seventy-six economists across the nation who have put their names and reputations behind the FairTax. For your reference, we’ve excerpted that here:

If passed and signed into law, the FairTax Plan would:

• Enable workers and retirees to receive 100% of their paychecks and pension benefits;
• Replace all federal income and payroll taxes with a simple, progressive, visible, efficiently collected national retail sales tax, which would be levied on the final sale of newly produced goods and services;
• Rebate to all households each month the federal sales tax they pay on basic necessities, up to an independently determined level of spending (a.k.a. the poverty level, as determined by the Department of Health and Human Services), which removes the burden of federal taxation on the poor and makes the FairTax Plan as progressive as the current tax code;
• Collect the national sales tax at the retail cash register, just as 45 states already do,
• Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax revenue as now raised by federal income taxes plus payroll withholding taxes;
• Continue Social Security and Medicare benefits as provide by law (only the means of tax collection changes);
• Eliminate all filing of individual federal tax returns;
• Eliminate the IRS and all audits of individual taxpayers (only audits of retailers would be needed, greatly reducing the cost of enforcing the federal tax code);
• Allow states the option of collecting the national retail sales tax, in return for a fee, along with their state and local sales taxes,
• Collect federal sales tax from every retail consumer in the country, whether citizen or undocumented alien, which will enlarge the federal tax base;
• Collect federal sales tax on all consumption spending on new final goods and services, whether the dollars used to finance the spending are generated legally, illegally, or in the huge “underground economy”;
• Dramatically reduce federal tax compliance costs paid by businesses, which are now embedded and hidden in retail prices, placing U.S. businesses at a disadvantage in world markets;
• Bring greater accountability and visibility to federal tax collection;
• Attract foreign equity investment to the United States, as well as encourage U.S. firms to locate new capital projects in the United States that might otherwise go abroad; and
• Not tax spending for education, since H.R. 25 and S. 25 define expenditure on education to be investment, not consumption, which will make education about half as expensive for American families as it is now.

Like the grassroots movements of the past (the one that gave women the right to vote, the civil rights movements, etc.), the FairTax movement only makes sense and is thus destined to succeed. The only question is…when? If you learn about the FairTax you are bound to agree it should happen NOW. To support the FairTax Plan, or for more information, go to www.fairtax.org.