Hello all!
April 15th is here! Yippee! I love tax time, the New Years or Christmas of taxes. Even though I don't pay many taxes at the moment I would, in a fashion somewhat resembling traditional Christmas euphoria, like to wish you all a happy new tax year!
Okay, so I am being silly and sarcastic. I don't really love taxes and I don't really love April 15th. However, I am not ideologically opposed to taxes. I believe they (taxes) are necessary in many situations to uphold and support good government. That is one reason I chose not to participate in todays Tea Party's being held across the nation. I feel the thinking behind them was reasonable in it's complaint (it is true that we have been taxed beyond what is reasonable) but I think they missed the mark in addressing the real underlying root causes. I may try and post a summary of my reasoning behind those remarks in the future; but in the meantime, because I believe taxes are not inherently wrong, and because I believe an excessive tax burden is only a symptom of a larger underlying problem or problems, I would like to offer up an alternative to our current tax system that both lowers our current tax rate and installs a much sounder, sustainable, and equitable means of taxation.
As the title suggests, the system I would like to advocate is known as the “FairTax.”
The thinking and rational behind the FairTax is by no means new. It has been around for a long time, but the FairTax is unique in that it has been recently developed to fit our current situation while remaining true to the old principles upon which it is built.
I thought of writing my own summaries of the FairTax, but I think it would be much better for those reading if they read the explanation of those who have studied it and much more and have a better understanding of economics and the tax system as a whole. So, in presenting the FairTax, I'll just copy and paste some things, and link to others.
With all that out of the way, allow me to begin.
The best source for information about the FairTax from an advocates perspective is www.fairtax.org, a research organization. I will use it as my primary reference (all my outside references in this post are taken from www.fairtax.org), though there is information on the FairTax elsewhere, neutral, critical, and positive.
In a nut shell, the FairTax is:
"
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, and, through companion legislation, the repeal of the 16th Amendment. The FairTax Act (HR 25, S 296) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system."
What does the FairTax accomplish in practical terms? Lots of things! But, some of the more significant are:
- Enables workers to keep their entire paychecks
- Enables retirees to keep their entire pensions
- Refunds in advance the tax on purchases of basic necessities
- Allows American products to compete fairly
- Brings transparency and accountability to tax policy
- Ensures Social Security and Medicare funding
- Closes all loopholes and brings fairness to taxation
- Abolishes the IRS
In future posts I will use collected information to make the case that the following details are true of the FairTax:
1. The FairTax is revenue neutral at $0.23 out of every retails dollar spent
2. The FairTax lowers the lifetime tax burden for most Americans
3. The FairTax benefits retirees who depend mostly on Social Security
4. The FairTax preserves the overall progressivity of the federal tax burden
5. The FairTax dramatically improves the U. S. economy
6. The FairTax improves the international competitiveness of American producers
7. The FairTax promotes home ownership better than the current system
8. The FairTax simplifies tax compliance, thereby reducing tax evasion
In closing, allow me clarify something. I don't believe the FairTax is a perfect system, only that it is the best currently on the table (I seriously doubt anybody can come up with a “perfect” system of taxation). One of the reasons I am posting about the FairTax is that I welcome the feedback of others whether it be in agreement, disagreement, or something in between. I am happy to debate the merits of the system, but because I don't believe the system is perfect I would be more than willing to concede a point if factually proven incorrect or undesirable. :-)
God bless and veritas supra omnis!
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