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The Fair Tax Act
To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.
Read the bills for yourself:
Senate Bill S. 122 by Sen. Saxby Chambliss (R-GA), 5 co-sponsors
House Bill H.R. 25 by Rep.
Robert Woodall (R-GA), 66 co-sponsors
The current tax code has grown into something incomprehensible. With over 70,000 pages of regulations and more changes made every year, even the I.R.S. can't quote every technicality. And how many billions of wasted hours do Americans spend preparing those taxes every year?
The lowest earners pay the highest rates. Since the first income tax was levied in the U.S., the tax structure has been progressive. The more income you make, the greater your share of responsibility. But this proposal levies the highest tax rates on those who earn the lower levels of income. That's the opposite of fair.
Consumer prices won't decline as promised. We can't trust companies to suddenly slash prices just because their taxes are gone. They're going to find other reasons to maintain higher prices and higher profits. In the end, we'll have inflation along with 30% taxes and lay an even greater burden on taxpayers.
The IRS has lost all semblance of "Service." Instead, this agency hounds taxpayers and businesses. Our entire financial lives are exposed on a government whim with intrusive methods that are clearly NOT what the founding fathers intented. It's high time to dismantle this ineffective, antagonistic bureaucracy and give people back their incomes.
It taxes purchases rather than income is a fairer system. Everyone buys things, so the tax burden is spread among the full population. And it's ultimately equal. Your tax rate isn't higher if you have a trust fund of lower if you own a house instead of rent. Best of all, the only way to dodge these taxes is to never buy a thing.
It encourages a strong work ethic. Since you get to keep every dollar you make, people and businesses will be willing to work harder to get ahead. And all those efforts can go towards generating earnings instead of documenting them.
It encourages savings. The more people save and invest, the lower their overall tax burden. And each person and family gets to choose what's best for them. It can help turn us from a nation of debtors into a nation of savers.
Family Allowances offset any regressive effects. Those who must spend all their income for essentials like food and shelter will pay virtually no taxes. The monthly allowance checks guarantee that the plan is fair for every family.
Retail prices will no longer include embedded taxes. Corporations already pass along their taxes in the cost of their goods. When we eliminate those taxes, we reduce the cost of goods and consumer prices will go down, not up. Consequently, the net costs paid by consumers will stay basically the same.
U.S. exports will be more competitive in the global marketplace. Goods and services consumed outside the U.S. won't have any sales tax, only whatever tariffs apply. As a result, our products will no longer be the most expensive choices in Brazil or China or India or here at home. We'll sell more, make more income for U.S. companies and turn around the trade deficit.
Offshore companies will pay their fair share. If a company sells goods or services in the U.S., they will pay taxes in the U.S. Better yeet, there will no longer be any reason for companies to go offshore to hide their incomes. This could help bring back jobs and ultimately benefit the whole U.S. economy.
A stronger market for used goods will emerge. Since taxes are only levied on new goods or services, used items will resell tax free. This will increase demand for everything used. More small businesses will rise up to meet that demand and overall waste will be reduced.
It adds a whole new layer of taxable services. All the services we use in our daily lives will now be taxed. Get a hair cut, pay tax. Consult an accountant or a layer, pay a tax. Even healthcare services are taxes. Who's going to pay the $15,000 tax on a $50,000 surgery? And how much will it cost service businesses to add tax collection to their core competencies?
The tax rate proposed is unrealistic. There's no way Congress will pass legislation that taxes food or healthcare or housing. Therefore, we will have to have a higher tax rate on everything else. Some have said as high as 60%. However, the bill caps the General Revenue rate at 14.91%. So either we have to add other means of raising revenue or we'll fall far short of the money needed to keep government in business.
It will make government more expensive.
Currently, governments can purchase items tax free but soon States and localities will have to pay tax on everything from fire trucks to cleaning crews. That will effectively raise the cost of all government services.
It will hurt charities. Although no one will have to pay taxes on donations to not-for-profit organizations, there will be no incentive for people TO give. That will likely lead to a drop in contributions.
It takes away key incentives. Tax deductions that encourage behavior are gone so we've lost out ability to reward wise choices. The only incentive in this plan is savings and investment. Not all of us have that luxury.
It gives corporations a free ride. Companies no longer have to pay any tax. By taking business out of the mix, we place the entire burden on consumers. What's fair about that? Without shared responsibility between consumers and corporations, the middle class will continue to be squeezed until it shrinks out of existence - all while top management grows even richer.
The business credit program is complicated. Since companies determine what purchase are untaxed investment or components versus those that are consumed and therefore taxed, the temptation to cheat is significant. And the logistics of managing and overseeing the required rebates could be difficult and expensive for businesses as well as government.
The Family Allowance is ridiculous. Every legal resident will be on the government dole waiting for the monthly check. Worse, we'll create an expectation that government should pay its citizens. And of course, we'll need a whole new government bureaucracy to manage it. So we simply trade the I.R.S. for the Sales Tax Bureau. How is that helpful?
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© Voters Voice, Inc. 2013