Posts Tagged fairtax
Two competing Presidential campaigns are always going to cover a wide swath of current topics. The candidates will meet with politically active groups from several of the states and speak to issues held dearly by each of them. However, if the tenor of this campaign year is to be summed up in just one word, it would be jobs. The reason that jobs have become the focal point of this election season is not because it polls well, it is not because people respond in a certain way in focus groups, it is because it is the issue that Americans have been pleading to be answered since 2008. While the Congress has tackled issues such as highly divisive healthcare reform that has so far failed to meet any of its promised outcomes, the issue of homosexuals serving in the military, and making sure that we are unable to drill oil off of our own coasts while ensuring that other countries can off of theirs. In fact, the most aggressive jobs plan that we have seen in the past four years, apart from a stimulus plan that failed to stimulate, involved funneling hundreds of billions of dollars to green energy companies owned by political allies that have already gone under. And it is in this national discussion on jobs that the issue of taxes will inevitably pop up.
The importance of tax reform is directly tied to the severity of this particular economic crisis. Our corporations, who do the hiring, are suffering under the highest tax in the industrialized world. A crippling 35% rate has pushed them off American shores and as a result, they have taken badly needed jobs with them. A reduction of that rate will go a long way to bringing those jobs back and keeping jobs here at home. But it will only go so far. These past four years will be long remembered by the business world. They have watched an entire political party castigate them as a greedy lot who deserve to be penalized even more than they already are merely for partaking in and succeeding in our capitalist system. A reduction of that corporate rate will have a direct positive impact but may not be enough to allay the fears felt by many that this antagonistic atmosphere could easily return. Our current political climate has become one of drastic swings toward one ideology and then back again. There is no security in cutting the rate against raising it again in the future. Of course it is easy to imagine, down the road, of an ever watchful group of voters who will keep guard of this newly created tax rate but that does not match historical reality. If we are to send a clear message to our job producers of both large corporations and small businesses, we must make it a big one. The FairTax eliminates the corporate tax. It does not just cut the rate for now; it eliminates the government’s ability to tax income directly and repeals the current tax outright. That is the kind of message that will bring jobs home, create them here at home, repatriate our money, and change the minds of other nation’s job creators. How many successful aeronautics companies in France would love to escape the upcoming possibility of a 75% tax rate and come to America which is offering an income tax rate of zero? We have the opportunity with the FairTax to not only shift the discussion of tax reform but to shift the paradigm of where we see ourselves within the world. There is one way to stop the bleeding of jobs overseas for sure, pass the FairTax.
The issue of jobs is also critically important because we are still a country that prides itself on its representation of the people. And there is no issue that is weighing heavier on the hearts of Americans right now. Much ballyhoo is made of the unemployment number every month. But we know that the number itself is only telling part of the story. The more depressing tale consists of the new lows our labor force participation is reaching on a regular basis. It is important to note that these people are not just out of work and are looking for jobs, for far too many Americans they have simply given up. Earlier this year Congress actually extended the time you could collect up to 99 weeks. Two years is 104 weeks. If the “land of opportunity” has to provide two years of unemployment then it is not working as it was formed. The fault does not rest in those that are utilizing it; the fault rests with those in leadership positions who continue to defer to an election instead of solving this problem. Tax reform is brought up as a major possible solution and there are two leading and very different ideas. One is to use the system we have now but change the rates up, and tax the rich more. This does not seem to create anything but government jobs, which fail to add as much to the economy as private sector jobs do. The other is a dramatic simplification of our current system. But it is nothing we have not seen before. In fact, the 1986 Tax Reform Act is very similar to this proposal. It is very important for a few reasons, it was possibly the last time that taxes played such a dominant role in the political discourse and it was a very large reform package. The 1986 law actually created only two tax rates, which were compiled together from the existing brackets. It is widely considered to be a success but it was as temporary as it was successful. The tax brackets could not stay simplified and in six years one was added by a member of the same party of the President that signed the original reform and an additional six years saw the inclusion of three more. Twenty years after sweeping and successful tax reform and we have returned complexity and morass back into the tax code against the will of the people along the way. Tax reform under such a complicated system will always be temporary and party designation is no guarantee of permanence. Luckily the FairTax answers these concerns simply and with a lethal efficiency. The era of class warfare tax arguments will be dead under the FairTax. Since the government no longer has the ability to peek into your pocket it can no longer use that information against you. Instead, it will have to focus on the larger problems that arise. The FairTax does not operate on a bracketed system that does nothing but separate the people and pit them against themselves. Any change made to the FairTax is a change made to everyone and everyone instantly. If Congress raises the tax they are also raising the tax on themselves, there are no shelters or loopholes to escape to. But more importantly, the FairTax helps the jobless of today’s society. Below is a graphed chart estimating the impact the FairTax will have on our future up to ten years down the line. If you can find a tax plan that can credibly claim similar benefits then by all means support it, and also pinch yourself, because you would be dreaming. The FairTax eliminates so much that is wrong with our current code to give us the tax code we deserve and need right now. Your Congressmen are still on recess, which means that they should be in your district. Call their office; get your friends to do the same. Find their town halls and ask them why they refuse to back the only tax proposal that is serious about tackling the key issue of our time. This is our time and the most exquisite of golden opportunities, do not waste it. We can wake up tomorrow with a malleable tax code that guarantees us only that it will change. Or we could wake up with the FairTax in a United States of America that respects its job producers, that recognizes the proper role of government, and reveres the individual citizen.
|FairTax simulation model results|
|Cumulative growth over current system||Year 1||Year 2||Year 3||Year 4||Year 5||Year 10|
|Gross domestic product||2.4%||5.2%||7.0%||8.2%||9.0%||11.3%|
|Income from employment (wages)||27.4%||31.8%||34.5%||36.4%||37.7%||41.2%|
|Disposable personal income (adjusted for changes in the price level)||1.7%||4.5%||6.4%||7.7%||8.7%||11.8%|
|Units scaled 2004 GDP = 1.00. Capital and labor set to equal constant shares of 0.3 and 0.7, respectively.
Source: Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal”, February, 2006.
There is a creeping tragedy in today’s political prognostication. It seems that instead of attempting to discover how best to grow ourselves out of this economic calamity we find ourselves in many are only interested as to where the next bailout will be applied. (It could also be here) It is a fascination that has consumed Europe and its politics culminating this Sunday in a Grecian election to decide that country’s future. It has pushed the Eurozone to its limits to no avail and here in the land of opportunity we look to which institution we shall remove from consequence, thus responsibility. For many in America the growth of student loan debt marks the next area in need of a government bailout. This permeates a very damaging misconception. One of the reasons the workforce is so strained and has seen a record number of people leave its rolls is because of intrusive government action. Requiring a bailout from the same government that is causing the problem is throwing good money after terrible policies. Money we literally cannot afford to throw. It need not be said that this recent interest in government bailouts has proven woefully ineffective. Ask Greece who has received two separate bailouts totaling 240 billion Euros, or an amount equal to nearly half of its debt. A delay of the inevitable is only that….a delay. Europe is now attempting to see if it is possible to buy freedom from consequence. They are slowly coming to the realization that effect surely follows cause, the same with gravity as it is with unwieldy entitlement societies.
Our efforts should focus on the policies that will grow us out of this constant economic gloom. We have experience malaise before in this country and it was the intrepid entrepreneurs of America that allowed us to experience “morning again”, we just needed leaders that understood government’s proper role. And in the economy that role is consigned to somewhere as far away as possible. The FairTax would be the proper first step to aid those struggling under a ballooning school debt crisis. There are a number of ways that the FairTax would attack this $1 trillion problem merely by changing the current tax code. First it must be noted that the surest bailout for these recent graduates is a job. To create these jobs it is imperative that we first create a climate most conducive for job creators; otherwise they will head to another location, which is the definition of competition. The FairTax will remove the suffocating regulation and oppressive taxes that hamper a company’s ability to compete here in America. Ripping away the 35% corporate tax would do that in a heartbeat. Creating jobs will provide opportunities to those entering the workforce today that are disheartened and provide hope for those who come after them that an education is not a wasted effort. Secondly the FairTax will ensure that workers will keep 100% of their paycheck. If debt is becoming such a concern they will have greater flexibility with their own money as to how it is spent. If the current tax code remains graduates will have to continue to watch every penny of their paycheck remainder after the government takes its share. Similar to how the mafia operates in neighborhoods they own. Most importantly to current students and future college graduates the FairTax recognizes what an education really is. An investment in human capital. Since there is no capital gains tax under the FairTax therefore there is no reason for a tax on tuition. The two are equal. This should go a long way to curbing the growing school debt crises for millions of Americans.
While the tax code is a major problem facing the future of our economy it is not the only problem. For instance, the dire need for jobs shows no sign of easing especially in regards to the actions taken by the Secretary of Homeland Security last week. In another blatant show of election year pandering the United States decided that it will no longer punish criminals who break the law. Allowing illegal aliens under a certain age to remain in this country based upon an arbitrary set of requirements without the consent of the judicial or legislative branches of government will make the search for jobs far more difficult for those just now entering the workforce. Luckily the FairTax has an answer to the issue of illegal immigration regardless of the unconstitutional and unchecked actions of a runaway executive. Even as the borders open to the sound of the rending of law books the FairTax offers us a chance in incentivize LEGAL immigration. Another topic of discussion that is rarely approached. Since the FairTax is collected at the point of sale any illegal visitor will pay along with every citizen. The difference is the prebate. The prebate will cover the sales tax cost of a basic basket of goods based upon the number of people within a household. This prebate will be sent to every legal American citizen and will not be given to those in this country by a less than legal means. Meaning that it will apply to law abiding citizens and will not benefit those whose first act on American soil constitutes a federal crime.
We live in complicated times, as all generations do. To pretend that our technological prowess can remove us from the basics of accounting or the consequences of our actions is nothing more than a lie or a foolish denial that will result a very grim outcome. We must at some point show maturity or else we run the risk of being defined by our adversities instead of conquering them. Like many mathematical enigmas the problems we face can seem insurmountable or impossible to unravel. But the most confounding riddle seems simple when you know the answer. To untangle the teeming mass of red tape, to unlock the door to opportunity, to break the cycle of joblessness and debt we need only to pass the FairTax. There are very real problems that we are facing as individuals and as a nation. We see other nations fighting the same battles. Let us learn from their failings. We could continue down the road to more bailouts and dire consequences or we can look toward what has made America such a success in the past. Our emphasis on the rights and duties of the individual has crafted an economic engine that has led the world for the better part of a century. Now as American power and strength seems to wane let us stand again for what we did in the past. Individual liberty and individual responsibility are linked. Greece has chosen collectivist ideologies and has had its sovereignty essentially stripped away. We still have a chance to do the right thing here. There is a simple solution to this complicated mess. We just need your help to pass it.
There is a sharp contrast between the world of the current tax code and the one that the FairTax will bring about. While it is important to examine the ideas behind and the ideals that embody each plan we must never lose sight of what we are trying to change. The current tax code is one we have grown used to since its inception in 1913. Its growth and expansion seem logical to us only because that is all it has been doing the past 99 years. The scope of its reach is never questioned because it has existed for decades. We never question as to why there must be a gross and net pay. We do not waste time wondering why our taxes have to be reconciled. We have been taught that government is too large and unwieldy to keep its own books and that we must do our part to help it. So it comes as a shock to people that a system exists, on paper and in Congress, which will do away with these age old assumptions and practices. Generations have spent their lives knowing only a confiscatory tax system that perceives all income as property of the state first and allowed into the hands of citizens. But how do we know if it is time to change tradition? Can we say that the tax code is evil when 99 years’ worth of leaders have examined it and kept it? Or has it just now overstayed its welcome? That is a question for the American people to decide and to highlight the differences we should examine the impact on Americans brought about by both systems.
The first easily realized aspect of our current tax code is that it is complicated. It is this complexity that has a profound impact on the daily lives of Americans. You see, this complexity is more than a mere nuisance. A basic system of taxing income was set up in 400 pages in 1913. Through time that code has grown to cover over 70,000 pages in code, regulations and tax court rulings. Yes, the tax code has its own separate court system. The instruction booklet for the 1040 alone is 189 pages long. The current tax code itself runs an estimated 3.8 million words. It is more than four times longer than the entire works of Shakespeare. The Bard used 900,000 words to artfully cover the breadth and depth of human emotion and experience. A tax system that needs four times that amount has other objectives in mind than revenue. In fact our system has turned into a method for social engineering. Anyone with a rudimentary knowledge of current political discourse will realize that our tax code has been used with a political purpose to split our nation into bitterly divided classes based on income. Not only is the income division used to hamper political debate, it masks the real issue. Our tax code is the progenitor of some troubling discussions around this country. Some people discuss the very real marriage penalty and if they should forego what is an institution to human civilization older than the idea of democracy itself. The tax code actually discourages this act in a stunning show of social reorganization that only finds itself at the edge of the tax debate. Couples also discuss whether or not both should work so that they are not punished by entering a higher tax bracket. People comprehend that this system penalizes success in such a way that promotions and raises can lead to a negative outcome. That is the definition of a backwards system. The tax code even incentivizes what cars to buy which can change markets and alter business plans. The government is using this overly complicated tax code to circumnavigate the Constitution and enter into areas never intended by its framers. And what has this code wrought? Its extensive reach and complicated methods have not brought us enough revenue to close an ever widening deficit. In fact, with all of the news about the debt crisis in Greece and Spain it is overlooked that America has a debt that exceeds the Eurozone and U.K. combined. It is now time to ask what the purpose of this tax code is. It cannot even collect revenue that even the most uninitiated would think necessary. The IRS has in the not too distant past allowed corporate bribes to be tax deductible. Another more recent case involves a basketball player deducting his fines from the NBA from his taxes. Lamar Odom was allowed to deduct $12,000 in fines for poor conduct from his 2007 return. As a Mavericks fan I find this even more insufferable. The problems listed here do not even take into account: the regressive payroll tax, the double tax embedded in products by the corporate tax, the incentive for businesses to leave the country and take their jobs with them due to a hostile tax environment, the multiple tax of social security income, the overwhelming cost of time, money and manpower to comply with an unknowable tax code, and the inherent disrespect and malice the code has for our founding document. What redeeming quality exists within it? Why continue down a road away from prosperity? What reason could possibly exist to keep this disheveled mess that breeds dishonesty, discord, and disarray? Some would postulate that the reason we do not change is that as bad as the code is there is no alternative. Luckily they could not be more wrong.
The FairTax would mark the end of Tax Day. April 15, or in this case the 17, would be just another day on the calendar. No more rushing to the post office or postponing figuring your taxes. Filing an extension would be a thing of the past. You would no longer have to save receipts or papers for tax purposes or look at a deducted paycheck. Gross pay would become take home pay and investments could be retrieved without taxes removed. There would no longer be tax brackets and corporations could finally move back to America and bring their jobs with them. The obsession with income would be removed from Washington and allow them to focus on the real needs of our society, of which there are many. The FairTax is a consumption tax, only met when purchasing a new item at the final point of sale. Your income would be your own and you could spend it as you see fit. The tax cost added to the products are mostly offset with the elimination of the currently 35% corporate tax, not to mention the $148 billion in compliance costs for big businesses alone. What we would see in the world after FairTax is one stripped of much of its complexity. Without an overbearing burdensome list of ever-growing regulations the free market will finally be allowed to flex its muscles a little. This increased competition should drive down the price of products while maximizing their quality and availability. We have tried extensive government intrusion and have seen little to no benefit for hundreds of billions of dollars of “investment”. Whether that is measured in failed green companies or an ineffective stimulus, the proof lies with the citizen and not centralized authority. Giving more people back their own money is the avenue toward success. This is realized by both parties. The Republicans have a strong sense of supply-side economics usually embodied by the example of President Reagan. The Democrats also show signs of this in a payroll tax holiday and behind the explanations of statements regarding the economic need for more unemployment checks. The basic idea is a recognition that if the citizen obtained more of his own property and income the more prosperous society will be as a result.
It is not a difficult idea to understand and has enough proof behind it to warrant much more use. If that is the case then why is there such resistance to it? The tax code has been and will continue to be used as a system of control if kept in its current state. The only issues standing in our way are the politicians that are willingly using it toward this purpose. They exist in both parties and in many areas. The alternative reality of the FairTax is attainable if only we are to act. In an election year such as this one it is imperative we use our constitutionally given right to vote our conscience and use our voice. The possibility of the FairTax is directly tied to the energy of its grassroots efforts. It will require more than email evangelism. It will require more than arm chair politicking. This is more than an effort, it is a cause. One worthy of our best efforts and attention. The two scenarios described above are very real and possible. One we know all too well and one that we seek to attain. Will our generation break a cycle almost a century long? That is a question to be answered by the American people. They are responsible for some of the greatest triumphs of mankind. It is the ingenuity of American citizens that brought the world rushing into this new millennium at break neck speed, it revolutionized industries and created wholly new ones, it taught man to fly and planted his foot on the moon. We have proven to history that man is better off ruling himself than having someone rule over him. Let us take up the banner of liberty again and show the world how an economy should truly be run. Without centralized authority but with control given to each individual citizen. Americans have given so much to the world, why doubt us now?
Nothing can overcome the will of the American people. This was proven at the start of our country’s existence and has continued up through today. This is an important facet to our national character that is vital to our fight to establish the FairTax. During my efforts to do so I have had the pleasure of talking to hundreds of people, including some United States congressmen. Aside from a few frequently asked questions, some of which I have endeavored to answer here, the main comment I have heard is that this is a great plan just impossible to implement. This comment is never regarding the mechanisms that will be put in place but the political difficulties involved in replacing the entire tax code with one that serves the people and not politicians. I fully understand how disheartening this view can be on any volunteer. It is difficult for us to hear that our spare time, money, and effort are spent in an effort that some call impossible. Before you lose heart, do realize that this backlash is expected when you account for just what the FairTax removes from our current system.
Aside from over 70,000 pages of complicated tax code our current system houses entrenched interests that seek to buy their own advantages while excluding everyone else. This can most easily be quantified when looking at the expenses of business in regards to lobbying changes in the tax code. It should be no surprise that businesses spend millions of dollars every year to carve out new exemptions and exceptions in the tax code that specifically address their needs while excluding others. These special interest loopholes are erased with the FairTax. That investment will be jealously guarded in the form of more money and lobbyist influence. An example of the audacity of lobbyists comes from a former member of the Senate. Chris Dodd, now with Hollywood’s MPAA, told his former colleagues that if they did not vote how he was suggesting they should, all Hollywood money would disappear from this election. Quite a threat when $4.1 million have already made its way to the President’s campaign. This outside influence quashes the ability for citizens to have any meaningful access to their representatives. A significant reason for this collusion is the complexity of the current tax code. The advantages enjoyed by these few groups have been bought with time and copious amounts of cash; they will not fade away easily. As daunting as this challenge may sound it is not insurmountable. Votes are always more precious to representatives than cash… if those votes may be shown to be in jeopardy. This will take numbers. Numbers are easy. Any candidate at the local level knows how to pass around petitions. Some are even online now. Another great way to meet other grassroots activists is FairTax Nation. This requires a little effort but can be achieved. As I have seen from my experiences, people are inclined to support this idea when it is brought to their attention. It is the only reason I created this website and attempt to illuminate different facets of this marvelous plan on a weekly basis. So pass this blog along, tell your friends about the FairTax, enlighten your coworkers. If we are to make a statement to Congress then we should at least be able to talk to our neighbors. It might be difficult to believe that a plan exists to reverse this tide of government control, but trust me; people are more than willing to listen.
Another barrier we face in our struggle are the politicians that seek to utilize the tax code for their own personal use. This is merely another instance that places our Federal government in the position of picking winners and losers. However, a little more deviously, this sort of manipulation is often used in forming our tax code into a behavior modification system. There seems to be no argument against this idea. In fact the government seems very proud of its ability to modify behavior using the tax code. For those that did not click the link I would ask you to reconsider, it leads to the IRS website and an area that houses lesson plans for teachers. This particular lesson, lesson 1 of Theme 5, studies how taxes influence behavior. Take a look through the worksheets, it is not a college essay, it is designed for young children and is a shining example of the morbid obesity of government. The entire lesson plan covers areas including why one should pay taxes, the responsibilities of the taxpayer and how to measure fairness. Is it fair to have half of the population not pay any taxes, is it fair for Americans today to suffer under an income tax system that was declared unconstitutional in 1895 before the passage of an amendment to make it so, is it fair to punish success with an increased tax rate that serves to send our money overseas, is it fair to punish families with an asinine marriage penalty, is it fair to retax income when it is invested, collected as social security, or passed on to family members after death? No. There is a method to measure fairness before the congress today and it is not found in the bloated IRS teacher lesson plans, nor is it found in the congressional ability to tweak a 70,000 plus page code to play societal engineer. It is found in a bill, developed in the private sector, that frees the American citizen from the overbearing burden of the complexities of our current code. It frees us from an agency that attempts to instill our kids its own values, change our actions, and still has the power to audit us at the end of the day. It erases the stigma that surrounds April 15 and allows industry to create jobs instead of comply with an impossibly complex tax code that serves the wants of a few at the expense of the rest.
Like many with a just cause ours is ignored by Washington D.C. That is why it requires citizen action, it necessitates your involvement. The heroes of our movement are found in comment boards correcting the untruths found ever-present in statements by politicians or reports in the media. They are found speaking to politically active groups and even in Congress itself, Congressman Rob Woodall-GA in particular. This undertaking is a relative new one but has made impressive strides in the past decade. That speaks heavily to the heart of our volunteers and to the validity of our idea. There are ways to help. Some do not feel up to speaking out in front of groups or manning a booth. For those not eager to get out and rub elbows there is a rather elegant solution. It is called $5 for FairTax. One reason I donate is because the $5 a month is given to the FairTax organization and directed right back to my state and district. This allows for the purchase of materials to support FairTax activists in my own backyard. Our fight can be made a little easier with every donation. This fight will be won with individual effort, not owed to a person or a party. In the tradition of our forefathers we are standing up for the principle of human liberty and standing against an aggressively expanding centralized authority. We do not seek to
divide the 99 from the 1. We are not promising more for some while taking more from a few. Our belief is in liberty and the expansion of it to every citizen of the United States. This is more than a discussion of proper tax rates and the level of loopholes allowed. This is an ideological crusade against the diminishing rights of the people at the behest of an ever growing state. This is a reaffirmation of the liberty fought for by our founders. Our recent history has seen both parties expand government and its power. Our immediate future, if left unaltered, shows a continuation of this activity. When the ship is this far off course it demands something more than increased election turnout. It requires more than a blast fax. It requires more than an email. It requires a stand. The citizen is the basis for this country’s political authority. Consent of the governed is necessary for our government to retain control. It is time for those same citizens to speak. We are not beholden to the political machinations of Washington, they are beholden to us and us alone. This is a call for a crusade. One of words and ideas that will shake the foundation of our current political establishment. We must start with the oppressive tax structure. It now acts as the foremost enforcer of the government’s will against the people. Once the current tax structure is dismantled the people can begin their work on institutionalizing liberty rather than power.
The power in Washington derives from the consent of the governed. The might of this country comes not from the halls of Congress but from the conscience of the people. Therefore the ultimate power in this country and the reason for its many accomplishments is the voice of the people. That is why it is so often under assault by centralized authority. Those of us advocating for a FairTax are well aware of the obstacles that must be overcome in order to see our dreams come to fruition. There are entrenched interests that are dead set against the idea of extensive tax reform and it will take a concerted effort by the grassroots activists to overcome. The concerted will of the American people has been called upon in the past to end the conflicts that spread across the world. It is now time to focus that immense power inwardly. Thomas Paine wrote, “We have in our power to begin the world over again.” They did and now it is up to us to continue the work. Starting now.
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.
America is unique in history as being the first country to have its citizens decide for themselves how they wished to be governed. It is good for us to remember how groundbreaking this simple idea was. The deliberations that created our American government constituted a breaking dawn of a new age. No more should people resolve themselves to be subjugated or oppressed, the signing of the Declaration and ratification of the Constitution built an alternative to totalitarianism. As our government today sprawls out before us it is difficult to imagine that the impact of the ordinary citizen could even be measured. But, somewhere deep within our complicated system of government lays the original intent of our Founders. Unfortunately most of the opportunity for citizen input still resides in the states and has been buffed away from Washington D.C with increased layers of bureaucracy. It is in this Federalism that was carefully constructed by our forefathers that our hope strongly endures. In many parts of our country the 10th Amendment is remembered and respected. It is through our states that our grassroots efforts can be especially instructive and useful.
While there is a focus on the U.S. Congress we should not be quick to dismiss the opportunities available to us at the local level. As many are left without the chance to jet off to Washington it would do us well to remember there are just as many opportunities to advocate on behalf of the FairTax here at home. The best use of our time would be in passing state resolutions. These resolutions should be simple enough to describe the state’s intent to repeal the 16th Amendment upon passage of the FairTax at the national level. I mentioned this last week however feel this could be an important weapon in our ever growing arsenal. When I was in Washington this past summer for our “Storm the Hill” event our group happened to stumble across a Pennsylvania congressman who expressed his appreciation for the FairTax however expressed equally his strong doubt that the 16th Amendment would ever be repealed. He was not the first to express such doubt and will not be the last. We could rapidly expand our number of cosponsors merely by taking away this concern. It is easy to explain that H.R. 25 has a sunset provision implemented after seven years if the amendment is not repealed. It only makes sense that a congress that passes the FairTax would take up the companion legislation that starts the repeal process. It would stand to reason that a national grassroots organization dedicated to the repeal of the IRS would see it through to the end. If worst came to worst and the seven year deadline was quickly approaching then Americans would understandably request that the system that will grow the economy and give them back more of their money not be replaced with a confiscatory income tax again.
But these arguments do not work to sway the minds of elected officials. I can imagine that they hear stories every day and one seems just as likely as the last. Results and political pressure work far more efficiently. When approaching your state legislatures it is vitally important to remember that of the 111th Congress 269 members listed their former jobs as state and territorial legislators. Another 214 worked in public service or politics. Those that travel to Washington can be found in our state capitol. Getting our states congressmen on record reaches a brand new level of importance with this information. A number of challengers to incumbents come from these positions, and if we have done our homework the FairTax could possibly become part of the debate. Once that happens we win, the easiest way to stop the FairTax is to ignore it, but once the American people figure out that there exists a plan that would allow them to keep what they earn our numbers rise again. Edging into the national discourse will only help our cause.
Far too often supporters of the FairTax focus on the finer details of the plan or the grand future that the liberty will provide. We should not neglect the seminal act of repealing the most expansive tax legislation in our history. While the 16th Amendment is short its verbiage is disturbing. “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.” This single sentence served to revert an American Revolution fought for liberty of the individual to a French Revolution which murdered in the name of the state. In fact, support for a progressive income tax is found in the Declaration of the Rights of Man and of the Citizen. Our current invasive and oppressive tax code is an anathema to our Founder’s intent it should by right be repealed. It is only fortunate that today we have a workable and preferable solution to the tax code. The question should not be how a divided country can repeal an amendment it should be why has it taken us so long to reach this conclusion?
It was mentioned at ABC’s Republican Presidential debate this past Saturday that the spirit of America is going to be decided in the coming election. I believe that this competition has been going on much longer than what we see in recent presidential contests. 1913 marked a departure from the freedom sought by our Founders; there have been many other departures subsequently. The FairTax represents a return to form. The Federalism of our system is still reminiscent of the early days of our republic. It is through this system that we have the best chance of ridding ourselves at long last of an overreaching amendment that violates the heart of the American spirit. Talk to your local legislators, start a discussion and prove to Washington that the votes exist to put the American citizenry in charge of our economy. It certainly could not get any worse. The election, like the Olympics, requires a great deal of planning and training. This quadrennial event provides the public the clearest opportunity to be heard. With your help 2012 can begin to unravel the errors made so long ago. Passage of the FairTax is a powerful first leg of the journey; it immediately repeals our entire federal tax code and ends the IRS. To complete the journey to ensure our freedom we have to repeal the 16th Amendment an arduous process that requires preparation. The groundwork can and should be completed in advance to help further the cause. The people should lead the way through the states to change the nation. It is the vision that shaped our country at its founding and it the only way to “win the future.”
I will be giving a speech to the Boiling Point TEA Party in Keller on the 26th at 7:00. Meetings are held at The New Frontier Cowboy Church, 600 N. Main & Johnson Road, Keller, 76248 (located behind McDonnells Building Supply, Hwy 377 (N. Main) & Johnson Road. Please stop by and hear more about the FairTax!