For most of us, April 15th was a reminder of just how complicated and expensive our current tax system is. The income tax code currently exceeds 67,000 pages filled with such complexity that even the IRS agents give wrong answers to taxpayer’s questions 43% of the time. What if there was a better way…a tax system that would put an end to the complexity, be fair to all and raise the funds needed to run the federal government?
The FairTax legislation was introduced by Congressman John Linder and currently has the support of over 50 congressional representatives. It proposes to eliminate all federal income taxes, business payroll taxes, self-employment taxes, capital gains taxes, corporate income taxes, gift and estate taxes and no taxes on Social Security or pension income. Try to imagine a world with no tax returns and no Internal Revenue Service. A world in which there are no taxes taken from your Social Security or pension checks or your paychecks. If you own a small business or farm, you’ll know that you can leave it to your family without fear of losing it because of inheritance taxes.
In place of the current tax system there would be a 23% national sales tax on all goods and services. Now before you stop reading and slip this page in the bottom of your bird cage, understand that this does not mean that the cost of all goods and services would rise 23%. In fact, the money saved by eliminating our current tax system is expected to cover most, if not all of the 23% sales tax! It’s estimated that taxpayers spend $500 billion each year just complying with the current tax code.
The FairTax is revenue neutral, meaning it is calculated to raise the same amount of money for the federal government as our current system. It is a progressive tax, meaning that the wealthy will pay significantly more than the poor and middle class. In fact, every family would receive a monthly cash payment (based on the size of the household) from the government equal to the estimated sales tax for spending levels up to the federal poverty line. In other words, the poor pay no taxes at all. The FairTax collects taxes from members of the ‘illegal’ and underground economy when they purchase goods and services. Currently, they pay no taxes. It would collect more revenue from the wealthy who often do not pay payroll, Social Security or Medicare taxes. Under the current system, wealthy individuals collect interest and dividends, paying taxes at reduced federal rates (15% maximum) or they buy municipal bonds and pay no taxes.
What you can do. It will take a grassroots revolution to overcome the powerful special interest groups who oppose the FairTax. Go to www.fairtax.org where they have prepared a simple message for you to send to your congressional representatives. It’s easy and will take no more than 5 minutes of your time. If you think this is a waste of time, remember that angry Americans voicing their opinion about $165 million in AIG bonuses caused the House of Representatives to pass a 90% tax on AIG executive bonuses! If we speak loudly in large numbers, they will listen! Join the revolution!