FAIR TAX ACT

I seem to sort of have a clue as to what I'm doing here, so I'll share some thoughts on one of my favorite subjects: The Fair Tax Act.

This is a rather controversial issue with people wanting a flat tax, some wanting a consumption tax, and others wanting no taxes at all.

I think we can all agree that we pay too much in taxes! I've done some study on the matter and have decided that the Fair Tax Act is the way to go. It was introduced into the Senate by Senator John Linder of Georgia.

As I understand it, the FTA would eliminate the IRS, remove all payroll taxes (this will not eliminate health care, life insurance and the like that you purchase through payroll deductions) and return that money to you, the employee, the taxpayer.

Taxes will only be paid by the end user and only once. Meaning that if you make (for example) ball point stick pens, you will not pay taxes on what you purchase to make the pen. You will collect a tax when you sell the pen. If the purchaser resells the pen, there is no tax because it is a used product. Another example would be cars. The manufacturer will not pay taxes for the components to make the car, but will collect a tax when the car is sold. When the car is later sold as "used" there will be no tax.

Now, to take the car analogy a little further, a person who can afford to buy a (new) high dollar vehicle will pay tax on it, but you, who can only afford a used car, will pay no tax. This is a consumer tax where you pay taxes (or not) on what you can afford or what you choose to buy. Will people still buy new vehicles? Of course they will. If for no other reason than to show that they can afford to pay the taxes on this luxury vehicle. Me, I'll buy the used vehicle. Cheaper to begin with and no taxes!

You may not know, but because of taxes you are already paying about 23% in hidden taxes before the sales tax you pay is even added in! This is because (in our earlier example) the ball point pen manufacturer has to pay for the taxes that were charged for each part of the ball point pen. And each seller of the pen component had to pay taxes when they purchased their supplies to make their component of the pen.

Now for what sounds like the bad news: under the Fair Tax Act, when you buy that new car, you will pay about 23% in taxes. But remember....that's only if you buy new. Used items will not have a tax.

There is some good news however. All current programs that are funded by taxes will still be funded. Don't worry that Medicare and Social Security will go away. They won't. There will be plenty of money collected in taxes (on new items) to pay for these programs.

Some bad news and good news: items that were not previously taxed (such as food) will be taxed. Before you start wondering why I would support such a thing, read on. Because there would be more money coming in, the government would send every taxpayer a rebate check every month to cover the basic necessities of life. It's broken down in a chart on the FTA website showing just how much each family or single taxpayer would get every month.

You will not have payroll taxes taken from your paycheck, pay taxes only on what you choose to buy (such as luxury items), and get a rebate check every month. How much better can it get?

If you aren't convinced yet, or have questions, go to www.fairtax.org and check it out for yourself. That's the best thing to do anyway. Check it out and either convince yourself that FTA is the way to go, or that it's the most ridiculous thing you ever heard of.