Tax Season

http://www.fairtax.org/

It’s that time of year, we’re all looking for our W-2’s, receipts for medical payments, charitable contributions, watching the mail for what we paid in interest on our mortgages, and so on. I think it’s time to talk again about the Fair Tax Act.

The Fair Tax Act will eliminate payroll taxes. No, not your health insurance, IRA, and the like. It will eliminate FICA (regular and Medicare) and Federal Withholding taxes. In my case, that’s almost $350 per paycheck; that’s almost $9000 a year. I don’t know about you, but I don’t get that much back when I pay taxes. And I know that by adjusting my status and deductions, I could get more back in every paycheck. I don’t like giving the government an interest free loan every year, but I want to be sure that I pay in enough to pay my taxes. I always get money back, so until the Fair Tax Act goes in, this works for me. Not, the government isn't giving me anything. It's money I earned and I should be able to keep it and use it as I want. But, I digress.

The Fair Tax Act is basically a consumption tax, and taxes only the final (new) product. For example: GM buys the materials and products to build a car and pays a sales tax on the materials and products (the steel to build the body, the sound system, the seats, the carpet and so on). When I go to buy the car I (the consumer) repays GM for the car and the materials and products and the taxes paid on the materials and products plus a markup for their overhead, manufacturing and employee costs, and so on. I then pay a sales tax on top of the other taxes. A sales tax is charged whether the car is new or used. Under the FTA, GM would not pay taxes on the materials used to build the car. The only tax paid would be by the purchaser and then, only if the car is new. The consumer would not pay sales tax on a used vehicle. Sales tax would not be charged on any used item because the tax was already paid.

Okay. You decide to buy a car and you buy whatever car you want. You buy what you can afford. If you can afford a new car, you also pay the sales tax. If you are smart, you will buy a pre-owned car and not pay the tax. Why? Read the last line of the previous paragraph and repeat after me: Sales tax would not be charged on any used item because the tax was already paid.

Don’t worry about Medicare or the government going under because no income tax is being collected. There will be more than enough taxes collected on end-user purchases (remember, that’s the person who is first to buy a new item) to fund everything that is already being funded though the income tax. If people are smart and only buy used items, how could this be? Well, some items aren’t usually bought second-hand: clothing, shoes, furniture, household appliances, computers, pens, pencils, paper, food, and so on. The list is endless.

And guess what? The FTA even considers the basic necessities of life such as food. Each couple, each single person, each family will get a rebate check each and every month to cover the basic necessities of life. The link in the right-hand sidebar will take you to the FTA site where you will see a chart of how much you, your and your spouse, your family would receive. Look around the site and you will find it and a lot of other interesting information.

I haven’t covered it nearly well enough, I’m sure. I urge you to keep an open mind and look at the site and make up your own mind. If you agree that this is a win-win situation, please, contact your congressional representatives (Congress and the House) to let them know you want them to support HR25. It’s been introduced into the Senate too, but I don’t have the Senate bill number at hand.

Please, don’t take my word for it. This bill is important and will give you more money. Take a look at your paycheck and see how much money Uncle Sam takes out every payday. Couldn’t you use that money?

Speaking of Taxes

I’m hoping that Congress will make Bush’s tax cuts permanent. I don’t know about you, but the money that wasn’t taken out of my paycheck went right back into the economy when I bought groceries, paid bills, deposited my paycheck into the bank, and just otherwise spent. I don’t keep my money under the mattress or buried in the backyard. It goes in the bank. Even if I put it in my savings account, it’s still in the economy.

The bank gave me a promise that it I gave them my money, they would honor the checks I write (providing that I made deposits equal to or more than the amount of the checks). If I put $100 in the bank, it doesn’t sit there with a sticky note on it with my name on it and then honors my check with my own money. The bank takes that money and gives it to someone else. It might even be paid out as wages to its employees! What a concept! And guess what? Just like me, those bank employees spend their money. That $100 I put in the bank circulates through the economy like water through a pipe. The economy isn’t stagnant; it constantly flows, although sometimes it does slow down. But, when the citizenry and companies spend money, it starts flowing again, faster and faster creating more jobs, higher wages, and lower prices.

Don’t fall into the socialist mindset of allowing the government to become the be-all, end-all of our existence. America was built on people wanting to make their own way not live off society. Sure, it sounds great, let the government provide health care, old-age pensions, welfare, subsidies and so on. Let the government take care of you; Uncle Sam knows best. Sounds like Big Brother is getting his toe in the door up to the knee. And once he gets in, you'll never get him out again.

And then where'e he gonna stick his nose? You want to smoke? Oh, no. Smoking's bad for you! Want a Big Mac? Nope, sorry, too much fat and cholesterol.

Listen to Big Brother, he knows best!