Examine the Fair Tax Option
National Sales Tax on all New Retail Goods.
Used Retail goes untaxed introducing the essential element of choice back into our tax code. If people choose to purchase used items, they pay no additional tax on the product, because the tax has already been paid. If they choose to purchase new, they pay the extra cost of tax on the item, for the privilege of purchasing new.
1. Invigorate the Economy.
Income = Price of product sold or Amount of Paycheck
Overhead = Taxes and other Expenses
Margin = Profit or what’s left from Paycheck after Taxes and Shelter, Food, Clothing
Income – Overhead = Margin
In basic algebra we learned that when we affect one side of the equation, the other side is affected too. This basic formula is mathematical. There is nothing “magical” about fair tax. To increase margin you must either increase income or decrease overhead or both.
The Fair Tax decreases overhead dramatically for both businesses and private individuals.
How?
a.) Businesses: With Fair Tax, businesses are released from Corporate Profit and return on investment taxation. With the repeal of the 16th Amendment and the repeal of all payroll withholding, employers also no longer pay 7.6% of their entire payroll as “matching funds” for FICA. Added to this is the substantial savings in compliance costs in to remain compliant with a 68,000 page tax code. This dramatically decreases overhead to any Business in America.
Business margins drive employment and expansion.
To get people back to work without raising prices the only method is to decrease overhead. For over 40 years our Government has only increased overhead and businesses have had to make up the difference with higher prices. This helps cause recessions and inflation.
b.) Individual: With Fair Tax, individuals have their income dramatically increased while decreasing overhead by not having IRS Tax compliance costs. They keep their FICA withholding and Income tax deductions. With the political realities currently existing, the Fair Tax also offers a program that makes those in poverty completely protected from the National Sales Tax on consumption by receiving a family size “pre-bate” check that completely offsets the taxes owed on the first $2000 spent each month on New Retail Goods. This pre-bate check also returns us to our founder’s intent by guaranteeing uniform taxation throughout America.
How? Because the wealthy get the exact same “pre-bate” check as other Americans. They are no different. The wealthy will go through that “pre-bate” check within the first week of each month, thus paying the 23% on all new retail goods they and their family purchase for the rest of the month, without exemptions, deductions and allowances. That “pre-bate” check means a lot more to those in poverty than it does to the wealthy. For low income households, the pre-bate check is the difference between rent paid and not.
c.) Moving from one economic strata to another, mobility, is called prosperity. That prosperity. Mobility (or prosperity) is greatly enhanced by the new found ability of those in the lower economic strata to save. That price tag for education and purchasing a home is more realistic with no FICA or Income Tax withholding + the “pre-bate” check now in their pockets.
2.) Fair Tax makes the United States the only country in the world that offers a safe haven for income and investments. Some estimates are as high as 500 billion dollars now in offshore accounts or puppet corporations would return to our economy. We don’t need government printing money or raising taxes on the most productive among us to invigorate the economy!
3.) Because Income and return on investments would be safe, this would allow the “margin” that is needed for the massive retooling effort our country must make to get off of foreign oil. This means jobs in a mature industry that already has recycling and maintenance infrastructure. It is sustainable without tax “subsidies”.
4.) With Fair Tax taxing consumption, tax revenue increases to the Federal government without taxing the “rich” more, neutralizing class distinctions. This is done by capturing the taxes on the underground economy. This dramatically broadens the base of taxation because that drug dealer, that pot grower, the “gangsta”, that illegal alien now must pay their fair share because they too are now taxed on all New Retail Goods.
NOTE: The wealthy drug dealer who is buying a new car every year, pays exactly the same amount on his new car as the lawyer across town, or the poorboy who digs ditches, if that’s his dream car.
5.) With Fair Tax taxes are collected at the New Retail sales counter, thus dramatically lowering compliance points to keep track of. Tax collection at the retail counter is ALREADY done in the vast majority of states. Fair Tax has a provision that actually pays businesses and states as reimbursement of collection costs. Point of sale tax collection has proven to be the most efficient form of tax collection.
Taxation without Representation?
There is nothing that will address this question without first being able to actually see what we are taxed on and how much. For the citizen to be able to let their representatives know about taxation they must be able to see what they are are being taxed on and how much. Tax payer vigilance is impossible under the current tax code. We rant and rave about the current 2000 page health care bill, yet barely a whimper about a 68,000 page regressive, convoluted tax code, which changes annually and is changed almost constantly every year.
The most not so obvious example is possibly the 7.6% tax on our salaries that our Employer now pays.
Workers never see what they actually are paying for Social Security, Medicare and Medicaid because that 7.6% is paid by their employer and is never shown on their pay stub. With the current system, instead of the employer paying them that 7.6% to retain their services, the employer pays the Federal Government. This is also a hidden tax rolled into the prices we pay every day.
Another hidden tax is corporate income taxes.
We don’t know as a consumer that close to 26% of our current retail pricing is due to taxation and it’s subsequent compliance costs. Gas now costs about $2.50 a gallon, it could cost $1.90. How much does that affect the price of all goods delivered by truck, train or airplane? How does this affect the prices to fly commercial airlines?
With Fair Tax you see your tax on every New Retail receipt. Then and only then can we have the transparency in our tax system that makes vigilance possible. Without transparency we will always have taxation without representation, because of hidden taxes, additional costs, and assessed fees that we never see, and often don’t know about.
