Fair Tax for all!

We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

--Winston Churchill

Past history has shown us that there is a disparity between the two major parties in this country. Historically, the Republicans have espoused a love for smaller government and lower taxes. Democrats, on the other hand, have seen fit to try to put every aspect of daily life under the auspices of the federal government, and pay for it by increasing taxes on the "rich". Keep in mind that your definition of "rich" and a Democrat's definition of "rich" may not exactly coincide.

In the last couple of years, I have come to the conclusion that the two parties have the exact same love of big government. The only difference between the two is that the Republicans don't want things to happen quite as rapidly as their liberal counterparts. Then again, the federal government has increased more under the first administration of George Bush than it did under both terms of Bill Clinton.

Aside from the dreadful lack of constitutional education in this country, and the constant political brainwashing performed by government-run schools, the biggest problem that this country faces is the detestable income tax system we all live with. Some of us live under the immense weight of the tax code, while others live off of the largesse that the politicians spew out to the "less fortunate" of society.

What we really need is genuine tax reform. I don't mean a simplification of deductions or a reduction of rates. The current tax system is akin to that rusty 1973 AMC Gremlin in the bushes. It needs to be scrapped and replaced by a 2005 Corvette. Likewise, the current tax system should be scrapped and replaced with an alternative that will offer the high performance boost that our economy needs.

My choice is the Fair Tax proposal, put forth by U.S. Congressman John Linder. (You can read the proposal here.) While this plan provides for the continuance of the transfer of wealth to those who have not earned it through government social programs, it does dramatically change the tax structure from a mandatory tax to a voluntary one. This is a good change in that under this system we could actually choose the amount of tax that we pay.

For those who didn't follow that link and read the bill, the Fair Tax can be summarized thusly: Abolish the income tax and the IRS and institute a national retail sales tax. That sure is a lot simpler than the current system, isn't it? The percentate of sales tax has been calculated to be in the 18-23% range, and while this seems excessive, keep in mind the amount of embedded taxes we already pay.

An example would be a purchase of $50. Of that $50, approximately 22% is in the form of embedded taxes. What are embedded taxes? Embedded taxes are the taxes that the manufacturers of all the components of said product paid (and passed on to their consumer, the final producer) as well as the taxes paid by the final producer and passed on to the store, as well as the taxes paid by the store and passed on to you, the consumer. Got it? The Fair Tax does away with that embedded 22%, bringing the cost to you, the consumer, to $39. Let's just assume that the federal sales tax rate will be 23%, the highest discussed. Add the sales tax to the cost of the item and you have $47.97. You have just witnessed a net reduction in cost of goods to the consumer by just over 4%.

Another thing to keep in mind is that under the Fair Tax you will no longer be paying any payroll taxes (Medi-scare, Social inSecurity, etc.). All of these government programs will be covered by the income from the Fair Tax. So instead of going from having 15% of your paycheck swiped from you up front, you get the whole thing. On top of that, every month the government will refund to everyone the amount of taxes that they have paid on the necessities of life, such as food, clothing, and shelter. Now, here's the one place I disagree with the Fair Tax proposal. The proposal is to cut checks or make bank transfers to rebate this money. If those on government assistance can have their EBT cards, why can't taxpayers under the Fair Tax system have their Tax Rebate card? It's not feasible to write that many checks, and I don't really want to give the government access to my bank account, even if it is just for deposit. Just a thought to those of you at Fair Tax headquarters.

The real strength of the Fair Tax is that it eliminates taxes on corporations. Not that corporations ever paid taxes in the first place -- they just added their cost of taxes to the price of their product and passed it on to you, the consumer. Without corporate taxes, however, the United States would instantly become the place to be for a corporation. There have been stories in the news about companies moving offshore to escape corporate taxes. Imagine the rush to come back to the United States if all corporate taxes were instantly eliminated. We'd have companies banging on the door to get in, and the economy would absolutely explode. Unemployment? It won't be a problem, since there will be more jobs than we can fill.

The absolute best part of the Fair Tax (to me, anyway) is the reason it will probably never pass. Politicians have turned class warfare into an art, and they practice it mercilessly. Every election, you hear the Republicans screaming that the Democrats want to raise your taxes (and they do) and you hear the Democrats screaming that the Republicans want to cut social programs (and they used to). With the passage of the Fair Tax, all of a sudden this kind of campaign rhetoric becomes useless. Everyone pays the same tax, and they pay it based solely on their desire to spend. The use of the tax code as election leverage is not available any more, and most politicians won't give up their leverage.

I encourage you to all visit the Fair Tax website and learn more about this bill. The implications for our economy are overwhelming, but it will never happen without a grass-roots uprising. It's time to get active.