CommuNity ColumNist - The "FairTax"by Kyle Michaelis
Gary Brown of Nebraska Fair Tax has expressed a desire in starting a discussion with Democrats and progressives about the merits of doing away with the federal income tax and adopting a so-called “FairTax” (aka national sales tax) tied to personal consumption.
Brown and his organization achieved some minor celebrity in the 2006 Senate campaign as challenger Pete Ricketts and the Nebraska Republican Party attempted to use correspondence between Sen. Ben Nelson and Brown to portray Nelson as a hypocrite who’d newly adopted a hard-line stance against the national sales tax just to score political points.
Over the summer, Nelson’s campaign used selective but substantiated quotes to characterize Ricketts as supporting a national sales tax that would require a federal surcharge of 30% on every good bought and sold. Ricketts denied the charge, claiming such statements were taken out of context. Yet, he would not go on record in opposition to such proposals, refusing to take any options for tax reform “off the table.”
Nelson successfully parlayed this posturing into a wedge issue that contributed effectively to Ricketts' "Wall Street Pete" persona, particularly with Nelson's claim that a national sales tax would benefit the wealthiest 5% - people like Ricketts and Nelson - to the detriment of 95% of Nebraskans. Brown and other "FairTax" proponents dispute these figures.
In his letter to Brown from May of this year, Nelson expressed serious concerns about moving to a consumption-based tax but encouraged further debate in Congress on the issue. Three months later, in his first debate with Ricketts, Nelson explained that relative receptiveness as a polite gesture that seemed better than telling Brown “where to go.”
The New Nebraska Network hopes to show Mr. Brown a little more respect than that. And, hopefully, readers will provide him the fair critique and open debate he supposedly desires. So, we present:
Gary Brown on
Why the "FairTax" is the Fairest Tax
The election is over, so how about some honest debate over REPLACING the Income Tax system.
Here are the FACTS. To replace the current 60,000 page Code the FairTax proposes TWO simple rules.
Rule 1:23% of the cost of all new, retail products and services will go to the U.S. Treasury as a National Retail Sales Tax. What is NOT considered a retail purchase? Used items, businesses expenses, investment expenses, educational expenses and basically anything not CONSUMED by an individual consumer.
No more IRS confiscation of 20 – 30% of your income. Your GROSS pay EQUALS your NET pay.
Rule 2: Every American is forgiven the first 100% of all sales tax attributed to poverty-level spending. Simple math guarantees that effective tax rates that now range from 15% to 35% will FALL DRAMATICALLY into a 0% to 23% range. Every American is treated the same. No loopholes, no special tax breaks.
There are no other rules. If you doubt me read the plain-English version of the House Resolution (HR25) (also at www.nefairtax.com) or look up the full legal version if you are a lawyer.
Let’s look at the main problem areas with the current Code that the FairTax solves:
*1*The current system is terribly REGRESSIVE to lower-income Americans. The FICA component of withholding is a set rate for every working American up to $92,000. And the lower your income the higher percentage you pay in higher prices caused directly by corporate income taxes. I call the current system a SERFDOM TAX.
The FairTax is infinitely more PROGRESSIVE in that no American pays any tax till they spend above the poverty level, and then rises slowly the more affluent your lifestyle choices are.*2*The current system allows over 1/3 of Americans to escape paying income taxes. Millionaires can escape income taxes because they don’t earn a paycheck and can pay lawyers to shelter their money. Criminals don’t pay income taxes because they don’t claim income. Some folks that work for cash don’t report all their income. And ALL of us lawfully taxpaying working saps pay a good 30% more just to make up for the free-loaders.
The FairTax collects all Federal taxes at the register when you make a retail purchase. Hard for anybody to escape that. And if a business (legal or otherwise) sells to you wholesale (no sales tax) then they had to ultimately buy their merchandise retail themselves so they likely paid sales tax.*3*The current system incurs close to 20% in totally wasted overhead just to maintain the system. Taxpayers pay $2.5 TRILLION in Federal taxes and tax compliance (tax preparers, lawyers, time spent filing returns, etc). The U.S. Treasury collects $2.0 TRILLION in actual taxes. That’s $500 BILLION in payments for nothing other than paying tax preparers, lawyers and lobbyists.
The FairTax has NO overhead. The only taxation is via the Retail Sales Tax. No tax filing. No deductions. No loopholes.*4*The current system inflates the prices of ALL goods and services sold in the U.S. and exported abroad by up to 20%. How do you think corporations pay for the production costs that are Federal Taxes, payroll taxes, tax accountants, lobbyists and tax lawyers? It’s built into the price of their product.
The FairTax charges sales tax on retail sales only. There is no corporate taxation so retail prices will be 15-20% lower. Even after the sales tax prices won’t be much higher than now. Imports cost more because the sales tax applies. Exports aren’t consumed in this country so there is no sales tax. Fantastic for our balance of trade.*5*The current system hides government taxation rates. No American knows how much tax they pay the Federal government in Individual Taxes, FICA Taxes, Corporate Taxes, etc.
The FairTax makes all Federal taxation 100% visible every time you look at your sales receipt.And the FairTax is the ONLY plan on the table which actually solves the biggest looming financial disaster that EVERY economist agrees on: the solvency of Social Security and Medicare.
So let’s debate the actual FairTax plan, not the imaginary plan politicians and tax lobbyists make up to scare you.
All true Fair Tax supporters ask for is a public debate. We feel confident that our proposal can withstand any TRUE scrutiny.
This is just a taste of the benefits of the FairTax. I urge everyone to investigate this plan. There is info all over the web – pro (mostly truthful) and con (mostly lies). The NE source for info is www.nefairtax.com and the official national site is www.fairtax.org.
Thanks for your time.
Gary W Brown
A longer, more complete version of this article written with the express purpose of encouraging debate with Democrats on the FairTax can be read here.