April 15th - Just Another Day

We're coming up on the infamous April 15th. The day that all taxpayers are required to have their taxes into the IRS. Mine have been in since February. I've received my refund and it's pretty much spent.

Wouldn't it be great to not have to pay income taxes? Wouldn't it be great to look at your paystub and not see deductions for FICA (regular and Medicare) and Federal withholding? In my case, that's over $300 that the Federal government takes from me. It galls me no end. I've worked for that money, I've earned it, but the Feds take it from every paycheck.

Look at your paycheck and see how much is taken from you. Some people say it's stolen. I can't go that far because it's all done by law. Okay, I'll give you legally stolen. In June, I should get a pay raise of $88 per paycheck. You know how much I'll see of that $88? Just about $53. The rest will go to the Feds in income taxes. Some people might think "Gee, only losing $35 a pay isn't that bad. I'd love to lose only $35."

The thing is, the Federal government shouldn't be taking taxes from us at all. And under the Fair Tax Act, they won't. The IRS would be dismantled, the income tax rolls and code will be abolished, and the taxes eliminated. That means that you will get an instant raise in your paycheck. Each and every paycheck.

How can this happen? Replace the Income Tax with a national retail tax. Now, before you get excited, let me digress just a bit. When I have extra money after paying bills, buying groceries, filling the gas tank and so on, I don't put it in a coffee can and bury it in the backyard. I also don't hide it under the mattress. That extra money is either put in the bank or spent.

If it goes into the bank, it doesn't sit there with a sticky note with my name on it until I withdraw it. That money goes into circulation when the teller gives it to another customer who takes it and spends it on rent, gas, groceries, or even buying stock. Maybe they buy something on eBay. In any case, that money goes into the economy. If I spend it instead of putting it into the bank, the same thing happens. It goes into the economy. That's a good thing, to quote some famous felon whose name eludes me (wink wink).

Say we bank at the same bank. The bank may take your money and my money and pool it and give it to my other reader to buy a car or house. That money goes into the economy. This is the way money flows. A nation's economy flows like water through pipes. Sometimes it might slow down, but that's when the plumbers come in (the Federal Reserve who lowers interest rates) to get the flow going again. Money is the economy and it is not stagnant unless there are some serious problems going on.

When money flows, jobs are created because business owners hire people and increase productivity. Our economy took a terrific hit on 9/11. The aviation industry and all the industries involved with aviation (hotels, travel to name two) were effected. Many companies with offices in the WTC either ceased to exist or were greatly effected by the tragedy of that day. It's taken over two years, but those industries and businesses are starting to come back. When money begins to flow, after slowing down, it takes awhile to get back to where it was. Now...back to the Fair Tax Act.

Aside from having more money to spend, you would pay taxes only on new purchases. Say your car just has to be replaced. You can only afford to buy a used car. Guess what? You don't pay taxes on a used vehicle! The person who has the money to buy a new car pays the tax. Same idea for any item that can be purchased new or used. Clothing, furniture, houses, and so on.

The Fair Tax (national retail sales tax) would benefit those who don't have the ability, or desire, to buy new items such as cars. They could buy a year old car and not pay taxes because it is used. If you have the means to buy a new car, you would pay the tax, about 22%. I know, 22% sounds high, but you are already paying about that much in hidden taxes and then paying another 5%, 6%, 7% or whatever on top of the hidden taxes. If you finance, you're now paying the hidden tax, the tax you know about, and then finance fees if you buy on credit.

Okay, I mentioned hidden taxes. Let's use the car as an example. Every part on that vehicle has a tax attached to it - from the steel used in the shell of the car, to the vinyl on the dashboard, to the carpeting on the floor and everything in between. Most car manufacturers buy their parts from another company. My husband worked for a company here in Manatee County that made automotive parts. Sorry, I can't remember what parts, but we don't have an automotive assembly plant here. Those parts were built here and shipped to Detroit or wherever the assembly plant was.

With the Fair Tax, those parts would be considered raw and not taxed until the vehicle is assembled. When I sign the papers for a new car, I pay the tax. When I sell the car to you, you do not pay any tax because I've already paid the tax on it. And don't worry about no one buying new cars. There are plenty of people who will still buy the new car. And, because there are no hidden taxes, the price of that new car will come down. More people will be able to afford to buy new cars. There will still be people who prefer used vehicles. No one will be out of a job - automotive assemblers or used car salesmen.

Okay, you will pay taxes on food. But! The government will send you a check, each and every month, for a sum that is calculated to be fairly equilvilent to what you would pay in sales taxes. I'm not going into that and I don't know how it's figured. You can go to www.fairtax.org and see the charts to see how it's broken down and how much you will get each month. My husband and I would get approximately $300 each month. It might be more, I haven't looked at the chart recently and might not remember correctly. Between they income taxes that are not taken from my paycheck and the rebate check sent each month, that's more than $11,000 a year for me! I don't know about you, but I can use an extra $11K a year. Putting that money against credit card debt, car payments, and the mortgage, we could be totally out of debt in about 5 years. I likes it!

I know there are lots of points I've left out. If you have questions, or if I have piqued your interest, please, go to www.fairtax.org and see for yourself. Don't listen to what other people, even me, have to say. Read more, educate yourself. If you don't educate yourself, you can't make an informed decision.

www.fairtax.org