FairTax in A Minute – Could we end up with both the FairTax and an income tax?
No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed. Moreover, concurrent with the repeal of the income tax, a constitutional amendment repealing the 16th Amendment and prohibiting an income tax will be pushed through Congress for ratification by the states (filed as HJR 16 in the 110th Congress).
FairTax in A Minute – What about the flat tax? Would it be better and easier to pass?
The flat tax and the FairTax share some important similarities. They are both flat-rate taxes that are neutral with respect to savings and investment. The flat tax, however, retains the invasive income tax administration apparatus and can easily revert to a graduated, convoluted mess, as it has many times over many years.
Very few people really understand the flat tax. Its authors will tell you it is a consumption tax that uses the income tax system for implementation. Only an academic or government bureaucrat would dream up a consumption tax that needs the invasive income tax apparatus for its application, when one can simply have a retail sales tax and reduce the bureaucracy by 90 percent or more! In addition, a large part of the burden of the flat tax -- the business tax -- will remain hidden from people in the retail price of goods and services.
In contrast, the FairTax is simple, easy to understand, and visible. It cannot be converted into an income tax.
Under a flat tax, individuals would still file an income tax return each year similar to today’s 1040 EZ. While this is a simple postcard, the record keeping required to fill in the blanks is still long and burdensome. Under the FairTax, individuals never file a tax return again, ever! Under the flat tax, the payroll tax would be retained and income tax withholding would still be with us. Under the FairTax, the payroll tax, which is a larger and more regressive tax burden for most Americans than is the income tax, is repealed. Under the FairTax, what you earn is what you keep. No more withholding taxes; no more income tax.
Notwithstanding flat tax proponents’ honorable intentions, income tax reform has been less than a success in the past. Congress has tried to reform the income tax again and again, with the result being greater complexity and, generally, higher rates. The problem is the income tax, and it is time to stop tinkering with it.
Flat tax supporters have made major political attempts to pass their reform, including the efforts of former Majority Leader Dick Armey and presidential candidate Steve Forbes, and yet their efforts have not progressed politically for several years. With every debate, the flat tax loses grassroots and congressional support to the FairTax. It is time to junk the entire income tax system and start over with a tax system that is more appropriate for a free society and better able to meet the needs of the information age.
FairTax in A Minute – Can the FairTax really be passed into law?
Do women have the right to vote in this country? Did we pass Prohibition? Did we repeal it? Do Civil Rights guarantee freedoms far beyond the lunch counter and mass transit? Do free-market economies dominate Eastern Europe, peoples once under the boot of communism? All these were grassroots efforts that effected significant changes in our nation and the world. Is the current income tax system any less a yoke around the necks of otherwise free peoples? We think not.
Passing the original 16th Amendment and the income tax wasn’t easy and repealing the income tax and the 16th Amendment won’t be easy either. That is why the FairTax has undertaken to build a grassroots movement and grassroots alliances to support the effort. When the FairTax generates unprecedented economic growth in the first few months of its effective date, citizens nationwide will make it clear to Washington that they want to make the change permanent. But this will only happen when the American people rally behind the effort, throw off the yoke, and demand rectification of 90 years of wrongs done by the income tax.
Posted By Bobby Eberle On June 23, 2009 at 7:21 am
We are all told that Barack Obama is personally popular. He's called a great orator (teleprompter included), charming, smooth, likable, and more. The list of positive adjectives provided by the media continues to grow as they fall more and more in love with him.
When push comes to shove, however, a president will have to face up to the policies that are being advocated. Have Obama and the Democrats overplayed their hand with this massive move to the left? It appears so, as more and more Americans are starting to take a second look at Obama's health care plan and other policies. I guess this is not the "change" they were expecting.
Scott Rasmussen has recently released a series of polls that paint a clear picture of Americans in transition. Americans are growing more and more leary of Obama's plans and are starting to see his efforts as hurting more than helping the economy.
According to one Rasmussen Poll, "39% of voters now say the country’s economic problems are caused more by the policies Obama has put in place." That number reflects a 12-point jump from just one month ago. More people (54%) "still say the country’s economic woes are due to the recession Obama inherited from President Bush," but that number is down 8 points in less than a month.
In another incredible result, more people trust themselves over Obama on the issue of the economy:
Sixty percent (60%) of voters now trust their own economic judgment more than the president’s. In early February, 49% had more trust in themselves while 39% trusted the president more.
Now only 30% trust Obama more when it comes to the economic issues facing the nation.
On the issue of health care, according to a Rasmussen poll, the American public remains split on what to do. That simple result should send a message to Obama to slow down, but it doesn't. Obama is pressing full steam ahead with a left-wing approach to health care, and the American people are undecided.
According to Rasmussen, 44% of Americans "say the Obama administration should wait on health care reform until the economy improves," while 43% say "health care reform should move ahead now."
This is significant in that Obama has mounted a full court press on health care over the last month or so, but the American public is not moving in his direction. Over the last month, public support for moving ahead now on health care has remained statistically unchanged.
One of the aspects of health care that has been in the news lately is the fact that Obama and the Democrats are pushing for a national requirement to force every single American to purchase health insurance. The American people are overwhelmingly opposed to this. When asked, "Should every American be required to buy health insurance?", 61% said no, 22% said yes, and 17% were undecided.
There are a number of factors working against Obama regarding health care. First, the American people are starting to say, "Enough already!" Every problem Obama sees comes with a big-government remedy. More government is NOT the American way. Second, the issue of health care is just not as important as Obama and the media make it out to be.
According to another Rasmussen poll, the issue of health care has dropped to its lowest level of importance "in nearly two years of tracking."
The latest Rasmussen Reports national telephone survey finds that just 49% of voters see health care as a very important issue. That’s down from 61% in early May and 62% in April. This is the first time since August 2007 that the majority of voters do not see the issue as very important.
Seventeen percent (17%) of voters now say health care is not very or not at all important, the highest result found during that same time period.
Support for health care reform as a presidential priority also has dropped as more voters think President Obama should work harder on his promise to cut the federal deficit in half in the next four years.
The key for stopping Obama's latest push on government-run health care is to keep up the pressure. As we have seen with failed immigration reform, when enough of the public speak out, Congress might actually listen.
FairTax in A Minute – What other significant economies use such a tax plan?
Two of the largest economies in the world rely almost solely on sales taxes: Florida and Texas. Many civilizations in history have relied solely on transaction-based consumption taxes: A percentage of a grain shipment in exchange for a safe harbor. Even a cursory study of history shows that nation/states that relied on consumption taxes flourished and prospered, supported democracies/republics, had expanding economies, and high levels of civil rights for their citizens. The exact opposite is true for empires that relied on income/poll/head taxes. These taxes were used to support despots, eventually collapsed the economies in which they were applied, and sundered civil rights.
The sales tax is a familiar tax, being a major source of revenue in 45 states and the District of Columbia. It is true, however, that no post-industrial nation, until now, has ever repealed its income tax andreplaced it with a federal retail sales tax. However, England did repeal its detested income tax upon the defeat of Napoleon and enjoyed the fastest, longest expansion of its economy in its long history. An expansion that ended only with the -- you guessed it -- re-imposition of an income tax.
No other country has a system of government like ours, and no other country has led the world in so many fields as ours. It was France and Germany that forced the imposition of a VAT in addition to income taxes across the European Community. Shall we follow France’s lead?
In contrast, we can observe the Irish Miracle that stems from their refusal to join the EU members in imposing high tax rates and their choice to follow their own path on taxation. Thus, we should simply strive to have the best tax system, period.
FairTax in A Minute – Does the FairTax improve compliance and reduce evasion when compared to the current income tax?
The old aphorism that nothing is certain except death and taxes should be modified to include tax evasion. Tax evasion is chronic under any system so complex as to be incomprehensible. As a percentage of gross domestic product (GDP), tax evasion in 2001 is beyond 2.6 percent, compared to 1.6 percent in 1991. This represents over 16 percent of taxes due. Almost 40 percent of the public, according to the IRS, is out of compliance with the present tax system, mostly unintentionally due to the enormous complexity of the present system. These IRS figures do not include taxes lost on illegal sources of income with a criminal economy estimated at a trillion dollars. All this, despite a major enforcement effort and assessment of tens of millions of civil penalties on American taxpayers in an effort to force compliance with the tax system. Disrespect for the tax system and the law has reached dangerous levels and makes a system based on taxpayer self-assessment less and less viable.
The FairTax reduces rather than increases the problem of tax evasion. The increased fairness, transparency, and legitimacy of the system induces more compliance. The roughly 90-percent reduction in filers enables tax administrators more narrowly and effectively to address noncompliance and increases the likelihood of tax evasion discovery. The relative simplicity of the FairTax promotes compliance. Businesses need answer only one question to determine the tax due: How much was sold to consumers? Finally, because tax rates decrease, tax evasion is less profitable; and because of the dramatic reduction in the number of tax filers, tax evaders are more easily monitored and caught under the FairTax system.
It is unlikely that “shopping across the border” in Canada or Mexico will result in any cost savings to the consumer. Remember, the FairTax is revenue neutral and therefore price neutral. This means the relative cost of retail goods and services after the FairTax remains very close to the same levels found in the marketplace today. With regard to interstate competition, since all states have the same federal sales tax rate, the federal sales tax is not an incentive to cross state lines to avoid the tax.
Humans are lucky. We have counseling and therapy resources. So, when our problems are too much to bear, we can get help. Angels, too, suffer stress. When they need help, they visit Fred. He's a special angel who runs a counseling service. Fred's services are extremely popular. His office is where angels tear to Fred.
This Fred should not be confused with Fred Fungus.
One day in a bare field, Alicia Algae met Fred Fungus. They sat down on a rock for a while because they took a lichen to each other.
FairTax in A Minute – How does this affect U.S. competitiveness in foreign trade?
Because the FairTax is automatically border adjustable, the 17 percent competitive advantage, on average, of foreign producers is eliminated, immediately boosting U.S. competitiveness overseas. American companies doing business internationally are able to sell their goods at lower prices but at similar margins, and this brings jobs to America.
In addition, U.S. companies with investments or plants abroad bring home overseas profits without the penalty of paying income taxes, thus resulting in more U.S. capital investment.
And at last, imports and domestic production are on a level playing field. Exported goods are not subject to the FairTax, since they are not consumed in the U.S.; but imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically.