I wanted to share some good information that was given to me by Brian Prasifka of www.fairtax.org
“The FairTax is a 23 percent, inclusive, national, retail (not assessed on used goods) consumption tax charged on all new goods and services (with the exception of education- which it considers an investment). Savings and investment are not taxed- only consumption. Every household in America would get a “pre-bate” check at the beginning of each month based on the estimated cost under the FairTax of basic necessities only. Thus, the argument that a flat tax or a VAT is punitive for lower-income households is eliminated under the FairTax.
It is estimated that the average retail cost of a product in the US currently includes 22 percent in imbedded taxes that are passed through to the consumer. Since the FairTax replaces corporate income taxes, in a competitive marketplace the cost before the FairTax is assessed would reduce as much as 22 percent. The FairTax also eliminates personal income taxes, payroll taxes, estate taxes, and capital gains taxes. If someone makes $60,000 per year, there would be no income or payroll tax withholding and their check would immediately increase to their “pre-tax” income of $5,000 per month. (Think anyone will be complaining about losing their mortgage-interest deduction after that?)
Also, the 23 percent figure is considered revenue-neutral to Uncle Sam when compared with revenues generated under our current system because it broadens the tax base. There are trillions of US dollars floating around outside the US that would likely be repatriated. Furthermore, under-the-table cash payments to illegal aliens, underground economies such as illicit drugs, and even dollars spent in the US by foreign tourists, are all added to the tax base once the economy shifts to a consumption tax.
The clamor from conservative voters calling for spending cuts is all well-and-good, but, as you know, between defense, entitlements, and interest on the debt, three-quarters of our budget is already “baked-into-the-cake” going forward. Four or five more years of slow growth, high unemployment and underemployment, and structural deficits is going to be a tough pill for a lot of Americans to swallow, as are the kind of serious cuts to entitlements that will be required in such an economic environment. Even the most aggressive across-the-board cuts such as those proposed by Representative Cantor ($2.4 trillion over the next ten years if ALL of his recommendations are enacted-which you and I know WON’T happen) will be a drop in the bucket as more of the baby-boomers retire and our Social Security/Medicare obligations continue to grow.
You’ve probably heard the statistic that, regardless of what marginal tax rates are, tax revenues to the federal government have consistently come in around 18 percent of GDP year-after-year for the last forty years or so. A solution that broadens the tax base and grows GDP, makes us more competitive globally than we are today (with the second-highest corporate income tax rate in the world), mitigates the outsourcing of jobs overseas (probably-even reverses it and brings more jobs from foreign-based companies to boot), and increases private-sector investment and jobs is what’s called for.
Best of all, it restrains the ability of elected officials to manipulate/amend the tax code to pick winners and losers as they see fit!”
Eric Bolling of Fox Business is a big supporter of the FairTax. Mike Huckabee won Iowa in 2008 largely due to his support for the FairTax, which is very popular there. You can go to www.fairtax.orgto get more information and sign up for their weekly newsletter.
It would be a powerful issue for the GOP in particular to one-up the President’s call for tax reform with a real proposal for reform that eliminates the IRS and replaces the current tax code with one that is transparent, fair, easy to administer, and makes us more competitive in a global economy.
I’d like to discuss how we can share resources with the Tea Party here in Fort Worth to get the word out. Kay Granger is a co-sponsor, but we need her to actually push it, not just put her name on it.
Thanks Brian for the information. I strongly urge everyone to look into this and see if this is something you can support. The largest department of our Federal Government is the IRS. I say let’s all get together to take back April 15th and make it just another day!