Sunday, April 09, 2006

Compare the FairTax, the Flat Tax and the Income Tax
Part 1 - 16th Amendment

Current Income Tax: No Change.
Flat Tax: No Change.
FairTax: Proposes repeal.


Under the current tax code we can expect only more and higher taxes. Congress will decide that they need more revenue to fund a project or entitlement of some sort and, instead of cutting funding from another source, will decide to raise the income tax. Oh, maybe only a percentage of a percentage, but it comes out of your paycheck. And perhaps there will be tax cuts at some point, but if you remember, tax cuts have a way of disappearing.

Let’s look at the Flat Tax. I have no expectation that income taxes will ever go down appreciably, much less stay down. Why do I think that? Look at history. When the Income Tax was established in 1913 it was a nearly Flat Tax. Since then, it’s been revised thousands of times (that’s not an exaggeration). It’s become such a tangled weave of bureaucracy that I doubt that there is anyone, included employees of the IRS who understand it. Call the IRS, talk to several different people about one question and I’ll bet you get different answers. It’s the same with tax attorneys, CPA’s, and anyone else who deals with taxes.

The FairTax proposes repeal of the 16th amendment. The main contention among FairTax supporters is whether the amendment should be repealed before or after the Fair Tax is enacted. I believe that we have to get the FairTax passed before we can repeal the 16th. There has to be something in place to “collect” taxes before the current system can be done away with. The government has to have revenue and that means that there has to be a way to collect the taxes before we can even think of burning the tax code behind us.

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