WHY FEDERAL TAX REFORM?
The cumbersome, bureaucratic nightmare that the IRS is to virtually every American taxpayer needs to end. Our tax code is crippling business, big and small, and it paralyzes citizens. It costs American citizens and businesses an astounding $265 billion in tax preparation costs each year alone. In comparison, this is $100 billion more than the cost to the government of the taxpayer stimulus checks sent out earlier this year. And after the tax preparation efforts are complete, American families spend months working just to pay their taxes to a government that continues to grow in size and scope.
That's why I intend to nail the "going out of business" sign on the Internal Revenue Service's front door!
IS THERE A BETTER WAY?
Our goal is to find a better way for taxpayers and businesses to participate in the federal tax process. And we believe the FairTax is the best way for citizens to do so. However, we are open to your creative ideas and diverse solutions, and are confident that working together we will find a better way.
THE FAIRTAX PLAN
The FairTax (HR 25/S 1025) is a thoroughly researched national tax system carefully designed to replace all income and payroll taxes with a simple, transparent and fair national retail sales tax. The Fair Tax will eliminate all federal income and payroll taxes. It will do away with all personal federal, corporate federal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment taxes.
The FairTax will replace the Internal Revenue Code with a progressive consumption tax. When consumption is taxed instead of citizen's earnings, savings and investments, the economy functions much better because taxes are levied on what we take out of the economy as consumers instead of what we put into the economy as producers.
The FairTax eliminates all federal taxes on the poor and gives the middle class a dramatic tax break. Each American citizen will receive a monthly prebate that will reimburse us for taxes on purchases up to the poverty line, so that we're not taxed on basic goods and necessities. Instead, Americans will only be taxed on what we decide to buy, not what we happen to earn. We won't be taxed on what we choose to save or the interest those savings earn. And, the tax will apply only to new goods, so we can reduce our taxes further by buying a used car or computer.
The Fair Tax also isn't intended to raise any more or less money for the federal government to spend - it is revenue neutral. However, it doe broaden the taxpayer base by taxing the $1.5 trillion a year annual underground economy, eliminating unfair tax loopholes for the wealthy and by making taxpayers of 12 million illegals as consumers. Under the FairTax nothing is withheld by the government from paychecks, the IRS is abolished and April 15th becomes just another spring day!
The Fair Tax is progressive, but it doesn't punish the American people for their success as does the current system. Nor does it punish the old fashioned virtues of hard work and thrift. Instead it rewards and encourages them. Expert analysis of the Fair Tax have shown that it lowers the lifetime tax burden of all of us-single or married; working or retired; rich, poor, or middle class.
THE FAIR TAX IS AN ADVANTAGE TO AMERICA IN THE COMPETITIVE MARKET
The Fair Tax will instantly make American products 12 to 25% more competitive because the cost of those goods will no longer be inflated by corporate taxes, costs of tax compliance, and Social Security matching payments. When we buy products now, those taxes are built into the cost, so all of us pay corporate taxes indirectly on top of the personal taxes we pay directly. Compliance costs have no real added value, yet they consume as much as 3% of our gross domestic product annually. These costs are an especially heavy burden on small businesses, which generate most of our jobs. The fair tax removes the income tax effects that are driving American jobs offshore.
No matter how hard Americans work, no matter how innovative and creative we are, no matter how superior our products are we suffer from a built-in competitive disadvantage simply because of our tax system. A recent study by MIT found that our tax system deprives us of about $1 billion in exports annually. When you export over-priced goods as we have, you inevitably end up exporting jobs and industries as we now are.
We are the square peg trying to fit into the round hole of international trade. The rest of the world isn't going to change, it's time that we do. Under the FairTax American companies are far less likely to move overseas and foreign companies are far more likely to come here, hiring Americans to build and work in their new plants. The Fair Tax is the path to greater prosperity and job security for us and for our children.
The FairTax broadens the taxpayer base by taxing the $1.5 trillion a year annual underground economy, eliminating unfair tax loopholes for the wealthy and by making taxpayers of 12 million illegals as consumers. Under the FairTax nothing is withheld by the government from paychecks, the IRS is abolished and April 15th becomes just another spring day!
THE FAIRTAX AND THE CURRENT ECONOMIC CRISIS
Furthermore, many experts believe the FairTax can help solve the current financial meltdown by:
1. Increasing take home pay which will allow distressed homeowners to stay in their homes and satisfy mortgage obligations.
2. Attracting an estimated $12-15 trillion of foreign investment into our economy and
3. Greatly benefiting "Made in America" products resulting in rapid job growth.
And just as importantly, all of these effects do not require huge taxpayer investments.
You may visit www.fairtax.org for more information on the FairTax including the supporting research.
QUESTIONS THAT NEED TO BE ANSWERED
Here are some of the questions we believe need to be answered:
Are there other tax proposals that might meet our short and long term revenue needs?
The FairTax represents a massive overhaul of our tax system. Many are skeptical of whether or not it could ever pass through the Congress. Are there intermediate steps that should be taken to enact the FairTax?