Although this website has explained before why the FairTax could be embraced by liberals I would like to take today to expand a little on this idea to paint a clearer picture. The FairTax is billed as a bipartisan plan and it truly is one. In fact, when the bill was first introduced, the support was split evenly between both parties. Since then however, the bill has caught on with Republican congressmen while it has been unable to make inroads with the other party. As a FairTax activist I can only postulate on theories as to exactly why, but would like to make it clear today that liberal causes are helped by this plan just as much as conservative’s are.
Without risking too much, it should be readily recognized that for many causes on the left equality is paramount. This idea that equality and liberty are taken up by the left and right and constantly fought over is not a new one. Many of today’s political arguments are attempting to find the right balance between these two concepts. That is not to suggest that conservatives shun equality or that liberals ignore liberty, but when push comes to shove, we usually fight for one at the expense of the other. Luckily, the FairTax makes no such distinction. In the current Presidential campaign we hear about the rights of the needy and the privileges of the prosperous and the difference in the way they are treated by the tax code. The sad fact of the matter is that both the rich and poor are being mistreated by our tax code. Both sides are letting the blindness of partisanship in the midst of an important campaign cloud their judgment. But, to an extent, both the arguments against each party’s plan are correct. Taxing the rich more will not ensure that they will pay it and lowering the tax rates across the board on those that do not pay into the income tax will create more of the so-called 47%.
I will try to expand on this while showing how the FairTax answers these criticisms in the best way possible. Both sides want a fair tax system, for the left, that means ensuring that the rich pay their fair share. This is a difficult measure to codify because the term is so subjective. But it usually involves raising the taxes on the rich, another term subject to change. The issue here is taxing accumulated wealth, it is the reason there is an estate, or death, tax in addition to the income, capital gains, and dividend taxes. All are attempts at evening the playing field because for the rich there are many ways to accumulate said wealth. This has obviously led to some discrepancies, the Buffett rule attempts to rectify these political arguments, pointing out that incomes that rely on capital gains are taxed at a lower rate than certain income tax brackets. The problem here is assuming that raising the tax rate will solve the problem itself.
The richest have means unavailable to others; therefore they are better equipped to dodge said taxes. They have the ability to hire accountants to pour over the complicated mess that is 70,000 pages of tax code and come out cleaner on the other side. And if all else fails, they can move their money offshore. And they do. The FairTax however, taxes accumulated wealth in the most efficient way possible. When that money is spent on luxury items, such as private jets, yachts, sprawling estates, and high end automobiles, they will pay the tax on those items regardless. Just like everyone else. It is unavoidable and simple enough that no accountant will find loopholes through it. It is designed to be as efficient as possible allowing no wiggle room for those seeking to avoid it. But, the money currently parked offshore should come back in droves, to be invested in businesses in America, allowing companies to hire people the way our economy needs.
While taxing the rich more falls into line with the ideal of equality, it does very little to help the working poor and middle class that are struggling. The idea of a fair share does little to close the gaps in their budgets. It is widely recognized that our tax code is just as unfair to these people as it is to anyone else. That is one reason that President Obama and Congressional Republicans passed a payroll tax holiday. While there were still some disagreements on particulars the idea behind the push was that the payroll taxes are regressive and punitive to the working poor segment of America. These taxes, that usually do not receive much attention, act against the progressive nature of our tax code. In addition, the high corporate tax rates make purchasing goods much more difficult for the poor and middle class. Since corporations must operate on profit the idea of a corporate tax rate is self-defeatist at face value. Any rise in that rate is likely met with three outcomes, the price of the product rises to meet the cost of doing business, the wages of workers decline to bridge the gap, or the quality of the product is reduced to make up the difference. In every one of these scenarios, the purchasing power of those without is dramatically reduced below what it already was. And we have the highest corporate tax rate in the world. Again, if raised, these corporations can always move offshore, and they are, but this time they are taking their jobs with them.
The FairTax ends the corporate tax, bringing those jobs home again, but it also ends the regressive payroll tax rates. All this sounds much like the benefits given to the wealthy, which would leave us in the same place as we are now in terms of equality, except for the prebate. The prebate is a monthly check given to all American households based upon the number of people within the house that covers the monthly cost of the sales tax on basic needs. This prebate is not based upon income and everyone gets it. It covers the cost of the new tax on a basket of goods necessary for survival according to the Department of Health and Human Services. Its basis on the size of household is very beneficial for poorer families who tend to house more people. This does far more to level the playing field then our current system. It ensures that we are indeed paying our fair share in taxes, because we are treated equally in that regard, but it helps those struggling by covering the necessities up to the poverty level.
This is also the only tax alternative for those concerned with the environment. It is rare to consider tax proposals based upon their carbon footprint, but the difference here is staggering. As of 2010 it took 6.1 billion man hours to comply with the tax code. That is nothing but 6.1 billion, with a b, hours of paperwork. Such work is decidedly harmful to the environment. This is an annual exercise that compiles upon itself the trash that comes with it. Our tax code has to account for all 311 million people and collect taxes on all businesses as well. Not to mention that to print the code itself, would take more than 70,000 pages in all. The FairTax is 131 pages, not 130 or 132, a plain 131. It collects revenue as money is spent and can be read on the receipt that is given anyway. If focuses only on businesses that act as the final point of sale and not on 311 million Americans. The time and effort expended to comply with this tax alternative cannot even be calculated on the same scale as our current system, and it is designed to be revenue neutral. Meaning that we are getting the same amount of money with only a fraction of the effort. Which only serves to make our market more efficient and our country a little greener for its efforts.
Another helpful way that the FairTax can advance the causes on the left is that it stops the social engineering in our current tax code. While this may sound like a helpful way to stop bad habits or harmful activities, that is a sword that cuts both ways. Advocates of gay marriage already know all too well how our current tax code benefits straight couples. There are a plethora of deductions and exemptions available to married couples that homosexuals cannot access. While this is neither an argument for or against the practice itself it highlights that our tax code does far more that generate revenue for the government, but makes decisions in our personal lives as well. Surprisingly, this is an issue that the church and the gay marriage advocate can equally abhor. Churches rankle at the thought that the government can strip away its exempt status based upon speaking out for traditional marriage, and the gay marriage advocate can be equally steamed that straight couples are given preferential treatment by the same tax code. That is how unsound our tax code is. It offends everyone equally. And it has gone on long enough.
For liberals and conservatives, the tax code subverts all of our rights equally. We seek bipartisanship desperately as voters, but our leaders seem unwilling to sacrifice political capital in an unending game of chicken with political brinksmanship. But this is not a game between Republicans and Democrats; it is a contest pitting citizens against those in power. I would be proud to stand with Republicans and Democrats together, united in this cause. But the question is whether we can unite, whether we can put aside other differences to stand behind a bill that benefits us all, whether we can look past petty differences to focus on a bigger picture? I say, “Yes we can!”