Not too long ago, I was a guest on my friend’s radio talk show. You might know it: Sanity Check, broadcasted from “the top of West Mountain” in Scranton, Pennsylvania. The topic of our chat was the FairTax.
Personally, I think the united States (I put the “u” in lowercase to indicate that the States are predominant) is over. But we can do a few things to make it better. We could repeal the 17th Amendment, which would return to the States some of their previous control over the US Congress. We could abolish the Federal Reserve and get back on a sound money status. We could insert this article from the Articles of Confederation, which, of course, predated the US Constitution: “Each state retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not by this Confederation expressly delegated to the United States, in Congress assembled.”
But the most important thing we can do right now is to pass the FairTax.
Congress is preoccupied with nonsense legislation like that which concerns illegal immigration, a bill to direct the Secretary of State to develop a strategy to obtain observer status for Taiwan at the triennial International Civil Aviation Organization Assembly, and for other purposes (H.R. 1151); and a bill, H.R. 475, to amend the Internal Revenue Code of 1986 to include vaccines against seasonal influenza within the definition of taxable vaccines (explain to me in what world the IRS should be dealing with vaccines for influenza).
I don’t personally see the need for Congress to be wasting time on such insanity. The cure for much of our problems is contained in the bill for the FairTax, H.R. 25.
So, what, exactly, does the FairTax do? Well, the FairTax
1) Imposes a consumption tax (currently 23%) at the federal level on all new purchases of goods and services within the united States (the FairTax is an inclusive tax in that it is included in the price of the good or service being purchased and is not imposed in addition to another tax). When you receive your paycheck, you get the entire amount, although the state deductions are a separate matter.
2) Eliminates all other federal taxes, including payroll taxes, with the exception of tariffs and excises which are specifically mentioned in the US Constitution.
3) Obviates that hateful organization I call the Gestapo, better known as the Internal Revenue Service. That has the ancillary effect of eliminating the $91.1 billion a year we spend on this wretched government agency (what a waste of money); it also eliminates the billions of dollars a year that people and businesses spend to calculate their taxes.
4) Reduces the influence of the “K Street lobbyists,” since most of their work is dedicated toward getting tax breaks for their rich friends.
5) Spreads the tax burden out fairly across the American citizenry. Even criminals, who avoid income taxes entirely, illegal aliens and visitors to the country would be compelled to contribute to the FairTax.
6) More fairly distributes the tax burden. Rather than being regressive in decreasing as the amount subject to taxation increases, the new tax would be even more progressive. Wealthy and better-off tax payers have more resources and spend more money on new goods. Less well-off citizens tend to purchase used goods only where they can.
7) Really is fair. Since food and new, but not used, clothing purchases are subject to the tax, a Prebate will be paid to offset the costs of these purchases.
8) Would increase available business capital. With the elimination of the corporate income tax, businesses would free up millions of dollars in capital which can then be directed toward something more productive than paying accountants and tax professionals to minimize their income tax liability.
9) Would transform April 15th back into just another fine spring day.
Using this form of taxation would more than adequately fund the federal government, while limiting the overall negative impact on the taxpayer. Work would flood back to the US and our trade deficit would reverse into a surplus.
You might ask, how does the tax money get to the government if there’s no IRS? Well, simple: the merchants would collect the tax (they would get a percentage for doing so to cover their costs); they would remit it to the state governments (the state would also receive a small percentage for doing so to cover their costs in collection and policing); after that, the states would send the money on to the federal government.
No IRS, no IRS scandals.
I was going to write more about this, but the FairTax is such a simple concept. If you’d like to learn more, go to www.fairtax.org and/or get the books.