FairTax to the rescue
Oct 10th, 2008 by admin
I can’t think of a better way to give the economy a kick in the pants than changing out tax code. Not change it so much as put it out in a pasture and put it down *click click boom*. Yes, kill it. All 60,000 pages of that garbage full of ins/outs/holes/gophers/boogers/nasties/confusions and well you get the idea.
Time for a little backstory. This is taken from the FairTax site:
The federal income tax was established in 1913. It actually required an amendment to the United States Constitution to make it legal. Why? Our Founding Fathers believed that taxing individuals on their private income was economic folly. They were right. The absence of an income tax, a tax on productivity, allowed our economy to grow and individuals to prosper for 124 years.
The original income tax legislation affected only individuals earning $4,000 or more per year, at a time when the overwhelming majority of Americans earned far less. The 16th Amendment was eventually ratified and added to the Constitution, and a national income tax was born.
That 16th Amendment was simply worded, the tax return consisted of only one page, and the entire tax code itself consisted of only 14 pages. No one could have imagined the vast impact it would have on the lives of their children, grandchildren, and future generations of Americans.
Since then, the federal income tax system has become so complex that it requires tens of millions of Americans to seek professional help to comply with it, not to mention the enormous, expensive federal bureaucracy required to enforce and administer the tax. The Internal Revenue Service employs more investigative agents than the FBI and the CIA combined, and with 144,000 employees, employs more people than all but the 36 largest corporations in the United States.
In addition to the $10 billion needed to operate the IRS, at least $265 billion (that is $900 for every man, woman, and child in this country) must be added to account for the cost of complying with the tax code. Massive amounts of our national wealth are consumed merely by measuring, tracking, sheltering, documenting, and filing our annual income.
So there you have it.
Going to post some more snippets from the website. Why type it when it’s already there?
- The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars $358 billion more than the taxes it replaces. [1]
- The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan. [2]
- Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case. [3]
- Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10. [4]
- The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be. [4]
- Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place. [4]
- The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted. [4]
- By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent. [4]
- Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [5]
- Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively. [6]
- Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax. [7]
- Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20. [8]
- On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base. [9]
- The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent. [10]
Read the full plan here (plain English)
You’ll often hear opponents say nothing more than “IT WILL RAISE TAXES TO 23% FOR EVERYONE!”. You can educate the ignorant. For stupidity, there isn’t much you can do. Even the stupid could be educated to realize screaming “23!” is nothing more than pandering for votes. On the whole, the opposition is mostly from Democrats. That is sad because this shouldn’t be partisan in the least. This IS about EVERYONE in America. It’s right-wing to left-wing to hot-wing. This affects us all. That said, Republicans aren’t getting off the hook so easy. There is some opposition there too. It comes down to votes, lobbyists and special interest who thrive on the current tax code like the leaches they are. Doing away with it would end their way of life. Good riddance, I say.
