As we celebrate with loved ones and enjoy the many blessings of the holiday season I look forward to the challenges of the upcoming new year. One of those challenges of course is the enactment of the FAIRtax.
With the inception of the Department of Government Efficiency (DOGE), many citizens are beginning to take notice of our national debt. As I write this article, our national debt has passed the $36 trillion mark and is increasing by the minute making it the 3rd largest expenditure of the national government behind only Medicare/Medicaid and Social Security. Since the S&P downgraded our debt rating in 2011 from AAA to AA+ we are now spending $1trillion in interest alone. By the way, our national debt in 2011 was $14.8 trillion. We have more than doubled that debt since then. Let that sink in.
Since the topic of debt has received some recent attention, let’s see how the FAIRtax would effect the national debt. Although the FAIRtax only effects inflow and not our out-of-control national spending, it will nonetheless lead to the decrease of the debt in three ways: tax evasion, economic expansion and transparency.
Tax evasion:
The FAIRtax is estimated to reduce illegal tax evasion by 90%, relative to our current income tax system, almost erasing our annual budget deficit. For 2023, the deficit was $1.7 trillion and our annual tax gap (taxes that should have been collected but we’re not due to evasion) was $1 trillion. Although there is evasion in any tax system, the collection configuration of the FAIRtax changes everything. The FAIRtax is collected by the retailer, passed onto the state and then passed onto the US Treasury drastically decreasing the number of tax collectors (retailers rather than businesses and individuals). The IRS will no longer be necessary and will be eliminated.
Economic expansion:
Decades of research has strongly indicated that the FAIRtax would result in increases in real wages, disposable income, consumption and the US GDP. The FAIRtax would increase the tax base from $5 trillion to $9 trillion, with no exclusions, exemptions, deductions or loopholes. With a 0% corporate tax rate, the incentive to hoard trillions of dollars offshore will evaporate and will come rushing back to the US. The criminal underground economy as well as illegal aliens will finally pay their full federal tax burden as they consume at the retail level just like the rest of us. The trade deficit will also shrink when American goods are no longer burdened with the approximate 22% imbedded cost generated by our current income tax system. The resulting surge for American goods will lead to more good paying jobs.
Transparency:
With one national FAIRtax rate and prebate schedule, any changes to the tax system will receive unprecedented sunlight, scrutiny and public interest. A great deal of the smoke and mirrors of our current income tax system will vanish and only true federal spending will be at issue. All of this results in a perfect incubation chamber for reducing the national debt. The FAIRtax will increase Treasury receipts and, by default, bring forth the greatest amount of sunlight to our federal spending. This will undoubtedly lead to a significant curtailment of our run-away federal spending and our ballooning national debt.
For more information please go to FAIRtax.org
