BY KEN BECKER | AUGUST 11, 2010
New completely voluntary tax system to fund the federal government
I want to introduce to the public a new concept for funding the federal government. A new efficient tax system that is completely voluntary. This tax plan has been introduced to the United States Congress as the FairTax Act (H.R. 25/S. 296).
Imagine keeping every dime of your paycheck. No federal income tax taken out, no social security or Medicare tax taken out, no taxes on business and no taxes on investment income. In addition you would get a monthly payment to cover taxes on all necessities up to the poverty level. All of this replaced with a consumption tax of 23 percent on new purchases only.
No, the cost of everything you buy will not necessarily go up 23 percent under this plan. While the cost of new products would go up, many of the costs to produce products would be eliminated which would reduce retail prices.
How could this be? All taxes and tax compliance costs like tax preparation and accounting fees on production of a product are passed on through each process and then eventually passed on to you the consumer. These are called embedded costs. Economists estimate that there is roughly a 22 percent increase in the cost of merchandise due to embedded costs. The FairTax would remove these costs.
Now imagine how businesses based overseas would react to a country that does not punish them for creating jobs. A country that says, “if you come here and open a business we will not tax you.” Business from all countries would flood into the U.S. to base their operations. One would literally have to hide under a rock in order to avoid getting a job.
The underground economy will be taxed at last. Illegal businesses such as drug dealing, prostitution, as well as legitimate cash only businesses that are evading taxes will finally be contributing to the federal government when they make purchases.
See the tax code in black and white with this new inclusive tax.
When you see a product at the store for $100 it would be marked at $100 and your receipt will read $77 retailer $23 tax. No more accountants, special interests groups and politicians helping some become exempt from paying their fair share.
The FairTax would change the way we fund Social Security and Medicare. Instead of taxing only 158 million workers, over 300 million citizens plus 50 million tourists who come from abroad will be funding our entitlement costs.
No more IRS. No more tax forms, no more tax filing. April 15th will be just an ordinary day. No fumbling around finding all your tax documents, then paying to have them prepared, and then hoping that everything is done right so as to avoid the dreaded audit. A consumption tax is a less burdensome tax since it is paid by individuals both willing and able to pay them. It is not a penalty for productivity like the current income tax system.
The FairTax would encourage citizenship for illegal aliens since citizenship is required to qualify for the tax rebate included in this tax plan.
Our current tax code is like throwing sand into the engine of the economy. It’s time for a tax code that’s fair, transparent and understandable. We need to end the increasingly complex tax code that is dividing our great nation and start a tax system that promotes innovation and inspires new hope for a more thriving and prosperous America for all.
Let’s eliminate the special interests groups in Washington and return the power of government back to its people. You can help be part of a movement that will get our country moving in the right direction again.
Please visit fairtax.org or read The FairTax Book by Neal Boortz. If this sounds like a good idea to you, tell your representatives you want the FairTax.