We Can Make April 15th Just Another Day
It’s that time of year again – April 15th, the federal income tax deadline. Time to cross your fingers and hope you filed correctly lest you be visited by your friendly neighborhood IRS agent. Let’s be honest, the current federal income tax is too intrusive, too complex, too costly, and punishes both entrepreneurs and everyday wage-earners. There is a better way. The Fair Tax plan will allow workers and retirees to keep their entire paychecks (minus other non-federal withholdings), close all tax loopholes, eliminate the need for individuals to file tax returns, abolish the IRS with the effect of ending tax audits, eliminate hidden taxes on goods and services, increase government accountability, level the playing field for American-made products with foreign competitors, and allows families to buy basic necessities tax-free.
In 1998, the IRS budget for collecting income tax was $8 billion. In the same year, Americans spent $225 billion to comply with the tax code for that tax year. Businesses would have cut compliance costs by 95% had the Fair Tax been in place at the time and would have eliminate compliance costs completely for individuals. What kind of economic impact would that have had allowing Americans to keep that $225 billion? Would that money have created more jobs, encouraged more investment, or allowed more people to buy a home?
The economists measured the economic affects of adding the proposed 23% tax on goods and services (assuming that all federal income taxes are abolished) to determine whether or not the price of goods and services would actually increase. Some people would probably believe that businesses would selfishly keep the increased profit margin with the elimination of the corporate taxes (another false notion thanks to the media, the government, and public education). Companies would need to keep their prices low to compete in an increasingly competitive marketplace. In today’s market, most large corporations operate on less than a 1% profit margin (those greedy bastards). In the current system, all corporate taxes are reflected in higher prices. Likewise, if those costs disappear, any savings will be passed on to the customer. According to Dr. Dale Jorgenson of Harvard University the average producer would reduce prices by 20% in the first year under the Fair Tax system and would ultimately keep prices on the end products at about the same rate as before. In the current system, the American citizen already pays these hidden taxes in addition to what is withheld from his or her paycheck.
If the Fair Tax passes, the daily lives of Americans of every walk of life will have the choice of how much taxes they pay based on the financial decisions they make. No longer will investors be penalized for saving or contributing to the market. The only taxes any individual would pay regardless of income status would be the amount of money he or she spends above the determined poverty level for the size his or her family. The tax code will be much easier for the average person to understand and would eliminate the anxiety of potentially being audited by the IRS.
This is only the tip of the iceberg; the Fair Tax has many other benefits. Don’t take my word for it, do your homework and find out for yourself if this bold step should be taken. Visit http://www.fairtax.org/ and do some other independent research as well.
We must be realistic; however. Passing this legislation will not be easy. The most important part of this legislation will require repealing the 16th Amendment, which would make federal income tax unconstitutional. Also, after viewing the Fair Tax congressional scorecard, most of our representatives in congress have not made a commitment one way or another. This means that most of them are unaware of this legislation, have an incomplete understanding of the bill, are waiting to hear from their special interest groups, or hopefully, waiting to hear from their constituents. Whether your representative is for, against, or undecided on The Fair Tax, we all need to let them know what we want.
Related Posts:
Taxes, Just a Few Thoughts by T.F. Stern
Oh, the Irony by Brad Warbiany
Tax Reform by Eric Cowperthwaite
In 1998, the IRS budget for collecting income tax was $8 billion. In the same year, Americans spent $225 billion to comply with the tax code for that tax year. Businesses would have cut compliance costs by 95% had the Fair Tax been in place at the time and would have eliminate compliance costs completely for individuals. What kind of economic impact would that have had allowing Americans to keep that $225 billion? Would that money have created more jobs, encouraged more investment, or allowed more people to buy a home?
The economists measured the economic affects of adding the proposed 23% tax on goods and services (assuming that all federal income taxes are abolished) to determine whether or not the price of goods and services would actually increase. Some people would probably believe that businesses would selfishly keep the increased profit margin with the elimination of the corporate taxes (another false notion thanks to the media, the government, and public education). Companies would need to keep their prices low to compete in an increasingly competitive marketplace. In today’s market, most large corporations operate on less than a 1% profit margin (those greedy bastards). In the current system, all corporate taxes are reflected in higher prices. Likewise, if those costs disappear, any savings will be passed on to the customer. According to Dr. Dale Jorgenson of Harvard University the average producer would reduce prices by 20% in the first year under the Fair Tax system and would ultimately keep prices on the end products at about the same rate as before. In the current system, the American citizen already pays these hidden taxes in addition to what is withheld from his or her paycheck.
If the Fair Tax passes, the daily lives of Americans of every walk of life will have the choice of how much taxes they pay based on the financial decisions they make. No longer will investors be penalized for saving or contributing to the market. The only taxes any individual would pay regardless of income status would be the amount of money he or she spends above the determined poverty level for the size his or her family. The tax code will be much easier for the average person to understand and would eliminate the anxiety of potentially being audited by the IRS.
This is only the tip of the iceberg; the Fair Tax has many other benefits. Don’t take my word for it, do your homework and find out for yourself if this bold step should be taken. Visit http://www.fairtax.org/ and do some other independent research as well.
We must be realistic; however. Passing this legislation will not be easy. The most important part of this legislation will require repealing the 16th Amendment, which would make federal income tax unconstitutional. Also, after viewing the Fair Tax congressional scorecard, most of our representatives in congress have not made a commitment one way or another. This means that most of them are unaware of this legislation, have an incomplete understanding of the bill, are waiting to hear from their special interest groups, or hopefully, waiting to hear from their constituents. Whether your representative is for, against, or undecided on The Fair Tax, we all need to let them know what we want.
Related Posts:
Taxes, Just a Few Thoughts by T.F. Stern
Oh, the Irony by Brad Warbiany
Tax Reform by Eric Cowperthwaite
posted by Stephen Littau at 1:29 PM
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