Thursday, March 16, 2006

Let the Revolution Begin!!

Congressman Lindner (R) Georgia has introduced legislation in the House to end the income tax. It is worthy of our support.

Brief Summary Of The FairTax Plan

The FairTax proposal is a comprehensive plan to replace federal income and payroll taxes, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax proposal integrates such features as a progressive national retail sales tax, dollar-for-dollar revenue replacement, and a rebate to ensure that no American pays such federal taxes up to the poverty level. Included in the FairTax plan is the repeal of the 16th Amendment to the Constitution. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.

Americans take home their whole paychecks.
Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks.

No federal sales tax up to the poverty level means progressivity like today's tax system.
To ensure no American pays tax on necessities, the FairTax plan provides a prepaid, monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax?

No tax on used goods. The amount you pay to fund the government is totally visible.
With the FairTax you are only taxed once on any good or service, the sales tax is charged just as state sales taxes are today. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. When you decide what to buy and how much to spend, you see exactly how much you are contributing to the government with each purchase.

Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least, afford to pay.
Did you know that hidden income taxes and the cost of complying with them currently make up 20 percent or more percent of all retail prices? It's true. According to Dr. Dale Jorgenson of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices - from an average 22 percent on goods to an average 25 percent on services - for everything you buy. If competition does not allow prices to rise, corporations lower labor costs, again hurting those who can least afford to lose their jobs. Finally, if prices are as high as competition allows and labor costs are as low as practical, profits/dividends to shareholders are driven down, thereby hurting retirement savings for moms-and-pops and pension funds invested in Corporate America. With the FairTax, the sham of corporate taxation ends, competition drives prices down, more people in America have jobs, and retirement/pension funds see improved performance.

The income tax exports our jobs, rather than our products. The FairTax brings jobs home.
Most importantly, the FairTax does not burden U.S. exports as they are with the current income tax. So the FairTax allows U.S. exports to sell overseas for prices 22 percent lower, on average, than they do now, with similar profit margins. Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S.manufacturing sectors. At home, imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries' value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match.

The FairTax strategy is revenue neutrality: Neither raise nor lower taxes so consumer costs remain stable.
The FairTax pays for all current government operations, including Social Security and Medicare. Government revenues are more stable and predictable than with the federal income tax because consumption is a more constant revenue base than is income.

For example, if you were in a 23-percent income tax bracket, the federal government would take $23 out of your paycheck for every $100 you made. With the FairTax, if the federal government gets $23 out of every $100 spent in America, the same total revenue is delivered to the federal government. This is revenue neutrality. So, instead of paycheck-earning Americans paying 7.65 percent of their paychecks in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 25.65 percent, consumers in America pay only $23 out of every $100. Or about 30 percent at the cash register when they elect to spend on new goods or services for their own personal consumption. And this tax is collected only on spending above the federal poverty level, providing important progressivity.

Tax criminals - don't make criminals out of honest taxpayers.
Today, the IRS will admit to 25 percent non-compliance with the code. will be generous and simply take the position that this is likely a conservative estimate of the underground economy. However, this does not take into account the criminal/drug/porn economy, which equally conservative estimates put at one trillion dollars of untaxed activity. The FairTax will tax this - criminals love to flash that cash at retail - while continuing to provide the federal penalties so effective in bringing such miscreants to justice. The substantial decrease in points of compliance - from every wage earner, investor, and retiree, down to only retailers - also allows enforcement to concentrate on following the money to criminal activity, rather than making potential criminals out of every taxpayer struggling to decipher the current code.

Additional FairTax Facts
Creates jobs where the current system destroys jobs. By stripping out hidden federal income taxes and compliance costs, the FairTax makes US goods more competitive overseas and more affordable at home, thereby sharply increasing job creation while sharply reducing our trade deficit.

Gives workers their entire paycheck. No Federal witholding. What you earn, you get.

Eliminates Social Security witholding, the most regressive tax of all, while ensuring the system fullfills its promise to one generation without being a terrible burden on the next.

Eliminates hidden taxes due to corporate taxes and the cost of compliance for both retail and wholesale goods and services.

Dramatically lowers effective tax rates for lower and middle income persons and families; a rebate completely eliminates taxes for people at or below the poverty level. No other tax plan does so much to empower people to climb out of poverty.

Eliminates taxes on education. Education is seen as an "investment" in the individual and is therefore tax-free.

Allows families to save more money faster for home ownership, education, and retirement.

Allows homeowners to pay their entire house payments with pre-tax dollars; a vast improvement over the current home-interest deduction.

Frees up a great deal of valuable time wasted on filling out cumbersome and inscrutable IRS forms throughout the economy. A value estimated at over $250 Billion. (about 3% of the GDP)

Raises the same amount of money to finance the federal government as the current income tax system.

Taxes the Trillion Dollar (yes Trillion, with a T) underground, criminal, and drug economy.

Makes future taxation of income unconstitutional by supporting the repeal of the 16th amendment; returning our government to the financial principals intended by the founding fathers.

Contact your congresscritter today and demand that it co sponsor the bill.


Wadical said...

This makes waaaay to much sense to pass. Any idea what the Democrats stance is on this?
Either way, I'm sending e-mails today to all of my reps. I surely hope this passes. As tight assed as my wife is with money and budgeting, I believe we could bank some money.

ΛΕΟΝΙΔΑΣ said...

Most of the Dimmos on record are against it as are a number of the "Stupid" party. It makes taxpayers aware of the REAL cost of govt. social engineering. They will only pass it if threatened with their jobs. The only pitfall is that an amendment to it could keep the 16th amendment in place . We would then be in DEEP shit.

Hope said...

I have heard of this, although not so well explained. Here, i beleieve the term is Consumption tax, on luxury items, not necessities,( I believe HOT TUBS and massages are necessities.)Very proactive approach, something i shall ponder.