I have received quite a few messages and phone calls about the editorial I posted over the weekend about our nation’s debt crisis. There are lots of folks who feel very passionately about what’s going on in Washington DC. One of those people contacted me by telephone to ask me to write an editorial about the “Fair Tax.”I told him that I didn’t know enough about the plan to write an editorial and suggested that he submit his own op-ed piece so that I could publish it. He did. So… thanks to Mr. John Neitz of Lawton, Oklahoma for this article. Mr. Nietz also informed me that the House Ways & Means Committee will be discussing the Fair Tax in the days to come. He explained that this will be only the third time that the plan has been discussed in Congress. Maybe it’s time that we learned a little bit. Without further ado… here’s the article submitted by John Nietz!The FairTax Benefits: Young & Old, Rich & Poor, Liberal & Conservative, Employers & Workers, Consumers & Retailers, Individuals & Families, Just About Everyone!The FairTax Plan simplifies tax collection via a new national sales tax. Individuals no longer have to spend time and money on record keeping, searching for receipts, and filling out 1040 forms (or paying someone else to fill them out). April 15th becomes “just another spring day.”* Individuals no longer worry about inadvertently becoming criminals by making mistakes on their tax returns – No more fear of IRS audits!
* Individuals control when they pay taxes and how much they pay by controlling their own spending.
* Tax Preparers move to corporate accounting jobs, leveling out their workload and income through the year.
The FairTax Plan repeals all Federal Personal Income Taxes, Social Security, & Medicare Taxes.
* Workers take home their whole paycheck and so have more money to spend and save.
* Seniors feel secure, knowing that Social Security and Medicare are fully funded and are no longer in jeopardy of going bankrupt.
* Young people feel secure, knowing that Social Security and Medicare will still be around when they need it.
* Poor people no longer face the ‘work penalty,’ the 7.65% of their income taken out for FICA but not refunded on their income tax returns.
* Employers no longer have to pay the 7.65% FICA tax, freeing up that money for additional wages for workers and more jobs.* The Self-Employed are freed from the punitive 15.3% Self-Employment Tax.The FairTax Plan includes a prebate: a refund of the amount of FairTax on spending at the poverty level, paid to every citizen each month.
* Poor people are effectively un-taxed, which is very progressive and therefore attractive to Liberals.
* Everyone finds that the prebate is like getting a tax deduction for all the necessities of life.
* Every family chooses what is a “necessity” for them.
* The FairTax Plan only taxes goods and services once: the first time they are sold.* The repair industry booms as consumers choose to fix broken items rather than throw them out.
* Flea Markets and Yard Sales flourish as buyers buy used goods to minimize taxes and sellers reclaim the value of their used goods.* Environmentalists like the added incentive for people to reuse goods before throwing them out. The FairTax Plan is visible, printed on every receipt.* Individuals easily monitor the FairTax rate, making it much harder for Congress to sneak increases.* Individuals know exactly how much tax they pay to fund the government, possibly causing them to call for lower taxes / lower government spending.The FairTax Plan repeals the Estate Tax, a “death tax” on inheritances. * Families know all their wealth will go to their heirs, not the government.
* Families save the money spent on creating wills and trusts to avoid estate taxes.* Farmers no longer fear that their heirs will have to sell the family farm just to pay estate taxes.The FairTax Plan repeals the Capital Gains tax. * Investors keep all their profits, allowing reinvestment to grow their companies or start new ones.* Everyone keeps all the profits on their retirement and savings accounts, allowing them to compound their money tax-free and reach their goals more quickly (such as saving for a down payment on a car or house).The FairTax Plan repeals Federal Corporate Income Taxes. * Companies keep all their profits to reinvest in more jobs and equipment.* Companies no longer have to pay the compliance costs of filing tax forms.The FairTax Plan removes hidden taxes in US-made products. * Consumers see a reduction in the costs of goods due to hidden taxes (22% of what we pay is actually corporate taxes and compliance costs, passed along to the consumer.).
* American manufacturers are better able to compete on the world market due to no tax burden.
* International manufacturers move plants to the US to remain competitive.* Everyone benefits from the booming economy.The FairTax Plan makes the US a great place to manufacture goods. * Workers will benefit from the influx of manufacturing jobs and ancillary jobs.* Unions will benefit from lots of new jobs for their members.The FairTax is collected by retailers at the register and submitted monthly with a simple form.* Retailers in 45 states already collect state sales tax and so can easily add the FairTax national sales tax.
* Retailers only need to track their total retail sales to know how much FairTax to submit.* Retailers receive a portion cut of the FairTax they collect to compensate for collection / submission costs.The FairTax is aggregated by the states.* Most states (45) already collect sales tax and can easily collect the FairTax national sales tax as well.* States may keep a portion of the FairTax they collect in order to reimburse them for collection / submission costs (or they can allow another state to do the work and receive the reimbursement).The FairTax Plan is very hard to evade.* Law-Abiding Citizens bear less of the tax burden because everyone is paying their fair share.
* The Government takes in more of the revenue it is supposed to receive (The IRS admits that 29% of 2004 income taxes were not paid, not including all the tax revenues lost on illegal activity.).
* The Government focuses their resources on fewer returns and more easily catches tax cheats (only 30,000 retailers versus 160 million current filers).
* The Government sees fewer attempts to evade taxes because largest retailers won’t risk their reputations for a paltry amount, paid by others (the top 3% retailers sell 83% of the goods sold in the US).Q: Does The FairTax Plan really benefit everyone?
A: No, some people will suffer:
* Criminals who buy and sell on the black market: drug dealers, gun-runners, sex traders, etc.
* Tax cheats who avoid taxes by lying, hiding money offshore, and utilizing tax loopholes.
* Illegal aliens who work for wages “off the books” to avoid paying taxes.
* Employers of illegal aliens, profiting from underpaying them.
* Special Interests seeking special treatment in exchange for political support and campaign funds.
* Crooked politicians, who benefit from manipulating the tax code for Special Interests.
* Lobbyists for Special Interests.
… but that seems fair to me.]]]]> ]]>
See a typo? Report it here.