It is odd in a country that took the time to add Article 1 Section 9.8 to our Constitution to have a tax system obsessed with dividing citizens into classes. The tax brackets are merely subdivisions of the upper, middle and lower income classes that are specifically targeted come elections season. You are treated differently if you are married or single, with children or without. But the largest difference that arises when an actual discussion takes place is the separation of age groups. To hear the moderators of the numerous Presidential debates so far one would draw the conclusion that any law has to positively affect senior citizens and negatively affect younger people or vice versa. There seems to be no law that would be beneficial to both. Luckily possibilities exist far outside the minds of those in the media.
We should be clear about a few things, it is easier for people to deal with situations that are awful, as long as they are familiar, than with new ideas that sound a little too good. Many misstatements have been made about the FairTax including that it is good for the poor and upper class while it is bad for the middle class and that it is unfair to seniors. A Washington Examiner piece cites a Lawrence Kotlikoff study on three families making $20,000, $70,000, and $500,000 respectively. All families representing the classes our system fixates on. His study focused on what the transition to the FairTax would do to their effective tax rates. The lower class house got an 86% cut in its average remaining lifetime tax rate, the middle class house received a 46% cut, and the upper class house received a 42% cut. Separating the American public into these three groups is not only insulting it flies in the face to what our forefathers had imagined for a society of men created equal. The FairTax does away with this “caste-through-tax” system. By removing the income tax entirely the government no longer has to focus on the incomes of Americans citizens. If it finds the examination of incomes far too intoxicating to give up after the FairTax is passed then it should then focus on the ever expanding payrolls of the bureaucracy. By removing the income tax, payroll taxes, capital gains, and corporate taxes then the effective tax rates of all Americans decrease which leads to a growth for the economy aiding everyone.
Since kick starting the economy brings a benefit to everyone I would like to peer into the effect of the FairTax on the age groups that every reform discussion pivots on. The rather reasonable sounding argument about the FairTax’s effect on seniors is that it would require retirees to pay sales taxes even though they have already paid an income tax their entire career. Removing the burden of an income tax does little for those who do not need to pay it anymore. However, to rectify the mistakes in this argument one needs to understand that we are comparing two systems of taxation. To judge the effect of a new one it is required to understand the current one. The current multi-tax system is no friend to retirees. Remember that the money available to the retired has already been taxed through the income tax and payroll taxes. If it was invested successfully then it is taxed again with capital gains, the corporate taxes add to every purchase made, any social security income is also taxed even though it was withheld forcibly in the first place. In addition to that madness, April 15 requires the complicated filing of tax papers, most likely hiring of an accountant or purchase of tax aid programs. This is a hidden tax in and of itself. If there is any money left to be willed to another it will be taxed yet again. If you want to strip away these punitive and forbidding taxes support the FairTax.
Not content merely to extoll the horrors of our current system, let’s look into how the FairTax affects seniors. Immediately removing taxes on social security benefits and capital gains provides instant tax relief. The repeal of any and all corporate taxes serves to lower the final price of any products. The cost of the new sales tax on essential goods is covered through the prebate up to the poverty level. There is no tax on used items and no reason to keep track of expenditures throughout the year and reconcile them in April. There is no estate, or death, tax freeing Americans even more. The fact is that Americans of all ages are actively being lied to under our current system. The FairTax forces these lies out into the garish light of day. Your taxes would be simple enough to be read on a receipt and long gone are the days of meandering through 70,000 pages of code to find exemptions which you may claim. Essentially, the FairTax treats Americans the way its government should treat them, with respect. No more will the government hand out with one hand as it takes with several more. The taxes you pay can be calculated by the day on your own terms and can be tracked to the penny. Our current system obfuscates the entire process and we are told that we are better off under it than if we were to change. It is reminiscent of a passed stimulus package that was to hold the unemployment under 8%. The warnings of Washington always hold a tinge of threat. We should learn not always to heed them.
The FairTax also has something to offer the rest of the public. A huge problem threatening future generations is the unsustainable spending for social security. By the estimates off CNN, US News, Politifact, and the Wall Street Journal by 2036 & 2037 the existing trust fund will be depleted and 2029 marks the year less than 2 workers are paying for one retiree. Without any reform social security will not be around for children born today. That is a fact. All of this analysis does not take into account the politically expedient yet short term payroll tax holiday brought to us by President “Polls-are-down”. The FairTax fixes this antiquated funding mechanism by throwing all of the money into one pot. This allows the government to fund priorities such as fulfilled promises and defense. This also serves to make the spending process in Washington far more transparent. And it does away with another Washington lie, the self-sufficiency of the social security system. One of the ways to increase the transparency of government, and thus the people’s power, is to cut away at the institutional lies that it tells.
By fixing the funding mechanism for social security the FairTax provides peace of mind to those facing a future of unpaid promises and stops it from being a drain on our economy and an addition to our debt. By generating a robust economy the FairTax provides jobs for younger generations that cannot find them now. Our current system is a multi-tax system that shows the expansive power of the 16th Amendment giving the power to tax from “whatever source derived…” It has quickly turned into a system that can tax however many times. Many candidates and other plans only call for cutting off heads to this Hydra beast forgetting that with time and special interest influence the heads grow back even meaner. The FairTax pierces the heart of this unwieldy monster and restores a future for our children that teaches the honor and power of individual responsibility.
We do not live in a society structured by classes. We are not separated by ages, race, or gender. We are an American society that values the individual and should start living up to our founding principles. We can show young men and women that the government has no right to our property, we can provide working age Americans with the opportunities that their parents had, and we can give seniors the security they have earned. It has become abundantly clear that the centralized authority that directs our tax code now is not too keen on arresting itself. That job is left up to us. A FairTax works to give us a brighter future than the one we look at now. By fixing a broken funding system for social security it answers one of the biggest financial questions of our future. It secures it for those that are already using it and provides safety to those coming up. In fourteen Presidential debates so far with many more to come, the American people have heard many questions. At least now we have an answer.