An incredible opportunity for Congress and America
By Frank Salvato
It is a rare thing when the American people can get excited about a piece of federal legislation that involves taxes. Normally, our elected officials are trying very hard to figure out how to sugarcoat yet another tax increase so they can supplement their habit of funding things like museums for ground hogs and rodeos and tropical biospheres in the farm belt. But a bill sponsored by US Representative John Linder offers a "once in a lifetime" opportunity for our lawmakers to not only do what is right by the American people, but do something that makes them look good as well.
Say the word "change" to a member of congress and immediately their palms begin to sweat and their eyes start to shift nervously from side to side. Faster than the New York Times can put up another picture of a terrorist with a hood over his head, politicians erect a security wall in an effort to maintain the status quo.
But this time it doesn't have to be that way.
Congressman Linder's bill -- H.R. 25, dubbed the FAIR Tax Bill -- is a brilliant piece of legislation. What it proposes is nothing short of genius in its simplicity. The bill would replace our current inferior system of the income tax with a revenue-neutral personal consumption tax. The IRS would be eliminated as we know it and there would never be another tax deadline or audit again. It sounds too good to be true, right? Well, it is within our grasp. All we have to do is "lobby" our elected officials for it.
This proposed legislation would put in place a more equitable tax system while affording a win-win situation for the American people, business and government. In fact, there are no losers but for the political spendthrifts, not even the people employed by the Internal Revenue Service would lose.
If the FAIR Tax system was adopted, taxpayers would be able to keep 100 per cent of their paychecks. In return a 23 per cent consumer tax would be assessed on goods at the time of purchase. That may sound high but consider that most Americans fall into the 15 per cent tax bracket and have to pay 7.65 per cent in payroll taxes (just about 23 per cent right there). Then add in all of the hidden taxes placed on goods and services, 23 per cent is less than what most people pay now.
The beauty of this system is that it is directly proportionate to what people spend. Those who earn more tend to spend more and would pay more in taxes because they make more and spend more. Those with lesser income tend to spend less thus they would be paying less in taxes. The system is proportionate unlike the system in place today.
Critics say that the proposed tax would be unduly harsh on those below the poverty level. That couldn't be further from the truth. Under the FAIR Tax a rebate payment would be issued to every American household to replace the sales tax paid on necessities. No American would pay taxes on necessities and those living below the poverty line would effectively pay no taxes at all.
Congressman Linder's proposal provides a more stable tax revenue generating system than the income tax because consumer sales vary less than does the income of the American people. We have the most robust economy in the world with consumer confidence that is rivaled by none. This tax system allows us to benefit from that confidence.
Further, because this tax is assessed on the "end user" business-to-business purchases and expenditures would not be taxed. The proponent organization Americans for FAIR Tax has commissioned research studies that indicate that would stimulate an estimated 20 per cent to 30 per cent drop in consumer prices allowing for our spending dollars to go even further than they do today.
In a last gasp of twisted rationalization I can almost hear the politicos now, "But what of all the employees at the IRS and at the tax preparation companies?"
To be sure, there will be a need for credentialed tax professionals within the FAIR Tax system. Taxes are still being extracted so there will be a need for auditors. The difference here is that auditors would be allowed to be auditors instead of having to act like law enforcement officers. There would be some who would be in need of employment after the change -- there's that scary word again -- most tax professionals are highly trained. With the estimated 10.5 per cent growth the FAIR Tax would stimulate, the economy would be ripe to absorb these professionals into the private sector. This would eliminate the IRS and its feeding off of the public trough at a cost of $250 billion every year.
Oh, and by the way, the FAIR Tax would make moot the ongoing argument about Social Security and Medicare. Government would be fully funded under the FAIR Tax system.
The only reason this exceptional piece of legislation may not become a reality is that the politicians didn't want it put in place. The only reason they could possibly have to cheat you and me out of a superior and more equitable system of taxation would be because they are afraid of "change." The new system might spotlight their pork barrel addiction and their failure each and every year to balance the budget and spend within their means. The only reason they wouldn't vote for this intelligent piece of legislation is greed.
If you are tired of taxpayer funded studies on the mating habits of the South American three-toed tree sloth and redundant public works projects, contact your elected officials today and demand that they support the FAIR Tax. After all, they work for you, you shouldn't have to work a third of a year for them.
Frank Salvato is a political media consultant and managing editor for TheRant.us. His pieces are regularly featured in Townhall.com. He has appeared on The O'Reilly Factor and numerous radio shows. His pieces have been recognized by the Japan Center for Conflict Prevention and are periodically featured in The Washington Times as well as other national and international publications. He can be contacted at firstname.lastname@example.org Copyright © 2005 Frank Salvato
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