I have written articles about different aspects of the FAIRtax plan and also articles about the cumbersome, fraudulent and unethical income tax system that we have now. But let’s step back and actually look at the FAIRtax as a viable replacement for our current tax system.
The FAIRtax was designed by world renowned economists and businessmen who were simply tired of having to make their financial and business decisions based on how it would effect their taxes and not on what was best for their businesses and employees. What they came up with is a tax based on consumption rather than on income. In other words, taxes based on your spending habits rather than on your productivity. The FAIRtax eliminates the personal income tax, corporate income tax, payroll tax, inheritance tax, repatriation tax, taxes on savings and dividends, and all other taxes based in income.
Under the FAIRtax , one simple rate is placed on all new goods and services to be collected at the retail level and administered by the states. The states then send the taxes collected to the treasury department bypassing the Internal Revenue Service which is no longer needed and will be abolished. No income tax reporting = no IRS.
Many will tell you that the FAIRtax will make everything we buy a lot more expensive and therefore will hurt the poorest among us. This is wrong on many levels:
1) Every product you purchase today under our current system has between 17 to 30 percent of the cost of that item embedded in the price due directly or indirectly to the income tax. Without those embedded costs, prices will drop and even with adding the new retail tax, will remain roughly the same as they are today.
2) Once a new item is taxed by the FAIRtax, it is no longer subject to the tax again. In other words, if you wish to save money, you can purchase used items without having to pay the tax.
3) The FAIRtax believes that no one should pay taxes on what it costs to simply survive, thus the invention of the prebate. Every year the Department of Health and Human Resources publishes a poverty level chart based on family size. Using this chart, the FAIRtax calculates how much each household will spend on the FAIRtax up to the poverty line for the year, divide it by 12 and send a check for that amount at the beginning of each month. Think of it as your tax refund that instead of waiting until the end of the year and having to justify your refund on multiple forms, you get your refund on a monthly basis. This gives you extra money in your pocket to offset the cost of basic necessities.
4) The most egregious tax for the working poor is the payroll withholding tax. This goes away under the FAIRtax and allows you to buy goods and services with pre-taxed dollars. Again giving you more money in your pocket.
Social Security and Medicare are funded today by only those individuals who are earning a paycheck as well as matching funds from their employers. This equals roughly two workers supporting one retiree. Under the FAIRtax, a certain percentage of ALL tax revenue collected by everyone who buys any new good or service, will fund these programs. That will make both of these essential programs viable well into the future.
These are only some of the major points of the FAIRtax. For more information, please go the FAIRtax.org
