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Thread: The Fair Tax

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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default The Fair Tax

    Fair Tax Offers More Freedom, More Wealth
    The Mississippi Press
    8/2/05
    Charles Brooks

    Please do this experiment with me. Take a look at your last week's pay stub. See that nice big figure on top? O.K. I know it's customary to complain about salaries. See that relatively nice big figure on top?

    Now look at all the figures below that start eating away at your pay, leaving you with the hungry little number at the bottom.

    Draw a line through all those pay-stealing numbers and circle your gross pay in red. That's the amount you would receive under the Fair Tax.

    That's right. No deductions for Social Security, no income tax, no payroll tax. No federal tax of any kind. Of course, if you have deductions for health insurance, IRA or any other saving plan, they would remain, as well as any state tax.

    It's your money. Why should you have to hand it over to Uncle Sam? O.K. We do need government for some things -- like defense.

    But that's not even the point. Under the Fair Tax, government would still receive the same amount of revenue that it receives now -- from a national consumption tax.

    Imagine -- no more Big Brother IRS looking over your shoulder, harassing you for every clerical error. No more politicians micromanaging your life by giving you tax breaks if you live your life according to their whims, or punishing you if you don't.

    You get to choose when and for what you pay tax. Only new goods and services would be taxed, not income, and not used goods.

    The poor would still get a break -- in fact, they would be better off, along with most taxpayers and the entire U.S. economy. Every household would receive a monthly pre-bate equal to the taxes on necessities up to the poverty level.

    Not only that -- every item would be cheaper, because built-in federal taxes would be eliminated -- so the poor would have more money to pay for cheaper goods.

    Of course there's no free lunch -- the sales tax would be hefty -- about 23-30 percent. But the benefits would be substantial.

    For instance: With the elimination of the enormous, bulky IRS monster, the cost of tax compliance would be drastically reduced. Today, hidden income taxes and the cost of complying with the federal income tax represents 20 percent of all retail prices. Built-in taxes raise the price of everything you buy. Corporations simply pass the cost along to the consumer. With those built-in taxes eliminated, prices will fall.

    And that creates another bonus -- increased exports of U.S. products, not U.S. jobs. When products become cheaper due to the absence of built-in taxes, they will be more attractive in overseas markets. That benefits the domestic work force. At the same time, foreign goods would become more expensive, because the Fair Tax would be applied to them. That would further increase U.S. exports.

    The Fair Tax would also tap a new, unexpected revenue source -- criminal activity. Criminal wealth is currently not taxed, because criminal income, of course, is not reported. But when criminals spend their ill-gotten gain for new goods and services, that money would be taxed. This untapped criminal revenue is conservatively estimated at one trillion dollars.

    Finally, the IRS estimates that 25 percent of taxpayers avoid paying their fair share. The Fair Tax would be significantly more difficult to avoid, less cumbersome, less onerous, and would no doubt encourage more compliance.

    Because the Fair Tax would be, well, fair.

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    Forum General Brian Baldwin's Avatar
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    Default Re: The Fair Tax

    I have always supported a national sales tax. It makes sure that everyone in this country, legally and illegally, pay their fair share of taxes. But still favor some breaks for corporations since the better they do, the better we do.

    Brian
    Brian Baldwin

    Yea though I walk through the valley of the shadow of death I shall fear no evil.... For I am the meanest S.O.B. in the valley.


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    -Father Denis O'Brien of the United States Marine Corp.


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    Creepy Ass Cracka & Site Owner Ryan Ruck's Avatar
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    Default Re: The Fair Tax

    Sales Of Boortz Book Spike As Interest In Fair Tax Increases
    The self-proclaimed High Priest of the Church of the Painful Truth is power-walking through Concourse B at an impressive pace for a man limping on a recuperating knee. He's on a scouting mission: Are shops at Hartsfield-Jackson International Airport stocking his latest book?

    Is he curious? In need of an ego boost?

    "Revenge," he says in a voice Atlantans might recognize as either a jolting cold shower of meanness or an invigorating brew of straight talk on the radio.

    Neal Boortz is a New York Times best-selling author. So, as Boortz loves to say on air, "Bite me."

    His literary accomplishment, "The FairTax Book," debuted at Numero Uno for nonfiction titles, and it's there for a second week in a row. That puts him ahead of a Pulitzer Prize-winning author and "Confessions of a Video Vixen."

    Consider it a satisfying endorsement for Boortz, especially since he did it with a book that doesn't bash liberals — a favorite topic — but instead suggests throwing out the federal income tax and replacing it with a national retail sales tax. He also sees it as sweet revenge because he says his earlier book, "The Terrible Truth About Liberals," wasn't even stocked by many stores.

    Boortz, 60 and a fixture on Atlanta radio for more than half his life, is doing all he can to pump up sales of the new book. For weeks he has promoted the book on his nationally syndicated radio show, which airs locally on his home station, WSB-AM. Since the book came out, he's been rushing around the Southeast urging listeners and crowds at book signings to get on board.

    His 4 million weekly listeners — 480,000 of them in metro Atlanta — make for a national audience significantly smaller than that of Sean Hannity or Rush Limbaugh. Now Boortz has the kind of book credentials those bigger-name talkers enjoy. He's expecting to get some mileage out of it, winning converts for the tax plan and perhaps persuading more radio stations to carry his show, though he says that's not why he wrote the book.

    By the way, a Georgia congressman co-authored "The FairTax Book," but that's in finer print on the cover. In fairness, Boortz often gives credit to the congressman, John Linder (R-Ga.), a longtime friend who for years has unsuccessfully pushed legislation that would switch the federal tax structure to a national sales tax. Boortz says he has backed federal consumption tax ideas for more than 20 years.

    As the authors tell it, the idea for the book bubbled up when Linder's wife suggested the two men stop yapping about the tax and start writing.

    Boortz put on hold another book he had been working on — "Somebody's Gotta Say It" — which he hints might include an entire chapter about The Atlanta Journal-Constitution, a publication he enjoys skewering. Cox Enterprises, the owner of the Journal-Constitution, also has a controlling stake in Cox Radio, which owns WSB.

    Trading places

    On "The FairTax Book," Boortz and Linder each wrote sections and then swapped their work for the other to fix.

    "Neal's streams of consciousness were not entirely accurate," Linder says. "[And] I would write stuff that was pretty damn boring."

    Boortz says he tried to persuade the publisher, ReganBooks, to make his and Linder's names the same size on the cover. But the talk show man in him understands. "More people know me than him," Boortz says. "My name will sell more books than his."

    ReganBooks declined to comment on how many copies have sold. The book, which came out Aug. 2, is on its fourth edition, with 300,000 copies in print.

    Boortz and Linder decline to rate the tax plan's chances of becoming law.

    Bill Ahern, a spokesman for the Tax Foundation, a nonprofit research group whose statistics are quoted by Boortz and Linder, said he hadn't read the book.

    "Any fundamental reform is a long shot, but there is no denying that the momentum behind the fair tax concept is building," Ahern said. While consumption taxes, such as the sales levy, have advantages, Ahern said, it can be hugely difficult to enforce a tax on every retail transaction.

    While the book has gained some media attention, including time on Fox News and CNN, Boortz acknowledged that national coverage of it had been limited.

    Online, it's garnered both praise and criticism. Supporters consider it easy to read and straightforward. Detractors say Boortz and Linder put an overly rosy spin on what the effective tax rate will be and whether it will be sufficient to replace existing federal payroll and income taxes.

    Boortz says he had to brush up on some simple tax concepts before writing the book. He assures that he's no dummy. He fell six hours short of getting an undergraduate degree, he says, but he has a law degree. Still, he doesn't do his own taxes. His wife, Donna, handles their banking, and he relies on her to load his wallet with cash, a fact he notes while using a crisp $50 bill to buy a newspaper at Hartsfield-Jackson. "Balancing a checkbook would be a major effort," he admits.

    Big crowds

    The book tour has been a blur. Fans show up by the hundreds at bookstores, according to Boortz staff estimates. Jacksonville, 800. Fairhope, Ala., 350. Fayetteville, N.C., 600. Boortz zips in and out of airports, his way paid by the publisher and radio stations that air his program.

    After finishing a recent radio show at the WSB studio, he doesn't have time to stop by his Buckhead condo — he also has a home in Naples, Fla. — before a limo driver ferries him to Hartsfield-Jackson for another flight, this one to Charleston. As he bustles through the airport, fans call out to him. The praise comes from whites and blacks, though some listeners occasionally accuse Boortz of being a racist.

    Boortz's colleagues say his on-air persona isn't far from what he's like off air. Except that he's very shy, says Royal Marshall, one of the show's associate producers. "He's the type of guy who will throw a party and one hour before will wonder, is anybody going to show up? "

    Away from the studio, Boortz avoids engaging fans on the kind of issues that incite his radio rants.

    "I don't like doing the show off the air," he says. It's a stance he says some people misinterpret as arrogance.

    On the trip to Charleston, though, it's as if his face is still buried in a mike. He fires opinions and criticism like a machine gun. Everything gets hit. A young woman's fashions. A traveler's Louis Vuitton bag. The smokers in their own puffing aquariums at Hartsfield-Jackson airport. "Watch this," Boortz says, walking up to stare in at them. "God, what losers," he mutters.

    Soon he's on the plane, sitting in his roomy first-class seat. It's not long before he complains — repeatedly — about insufficient air conditioning. "I'm a creature of comfort," he says, using a temperature feature on his fancy wristwatch to prove his point about the heat.

    He also stews about the Delta crew's failure to announce why the plane has not pulled back from the gate though it was supposed to depart 40 minutes earlier. "I can guarantee, if we were on AirTran there would have been an announcement," Boortz says. AirTran also happens to be a sponsor of his show. Coincidence?

    Hours later, the driver of a stretch limo deposits Boortz at the back door of a Barnes & Noble in Charleston. Store managers and a police officer hustle him into the store and in front of a crowd that eventually grows to about 400 people.

    "How'd you like to get the federal government out of your paycheck?" Boortz booms to those in the crowd, some of whom got news of the book-signing via e-mail from a local group supporting the tax. The fans shout approval.

    "Make us mad, Neal," a man yells.

    "We're smarter than the government thinks we are," one woman calls out.

    Using a strategy suggested by fellow talker Sean Hannity, Boortz tries to keep the book-signing line moving by writing only his name, rather than personalized messages.

    "We listen to him on the radio every day," says Ridgi Neumayer, beaming at Boortz's signature on a radio he and his wife, Georgia, brought to the event. "Him and O'Reilly, I love them both. He sets the mood for a great day. So entertaining, and right on the mark."

    Michael Morgan, a professor of economics at the College of Charleston, also is there for the event.

    He often listens to Boortz's show and favors some kind of change in the nation's tax system, but he says, "I wouldn't base any conclusion just on what's in this book."

    Still, Morgan says he's not uneasy about potentially far-reaching tax reform being championed by a radio talk show host.

    "Why not?"

    Though Boortz happily tells radio listeners he will lie to them and urges them to independently verify what he says, off air he says he wouldn't lie about anything substantive.

    At the Barnes & Noble, Charleston attorney David Popowski scans the book's jacket. He puts it down after reading Boortz's short bio inside. It mentions Boortz's last book, "The Terrible Truth About Liberals." That's too much for Popowski, a Democrat who's never heard of Boortz before.

    "I find it sort of a turnoff," he says. "Right away that's such a far-right-thinking guy."

    Selling ideas, too

    Boortz describes himself as a Libertarian, favoring less government and more personal responsibility. Linder, Boortz's co-author, says the tax plan needs the support of Republicans and Democrats to become law. But no Democrats have signed on to the latest version of his bill.

    Boortz sees hope though, especially if the book keeps ranking high on best seller lists.

    "Every week it stays up there in the top two or three, politicians get more and more nervous," he says.

    He says he doesn't remember what percentage of the book's take he'll get, but in dollar terms he predicts it will work out to "way less than six figures." He says all his proceeds will go to the Donna Boortz Foundation, which his wife is setting up in part to help people who have recently completed drug rehab.

    Boortz has reason to believe that sales are going well. On his reconnaissance at the Atlanta airport, he told a bookstore cashier he was looking for a copy of "The FairTax Book."

    Sorry, she said, it sold out and is on back order.

    Boortz gave nary a smile as he walked away. "That's what you want to hear," he said. Earlier at WSB, associate producer Royal Marshall considered the book's success.

    "I hope it doesn't change him," Marshall said. Then he shook his head as if at the absurdity of his comment.

    "Neal Boortz has been Neal Boortz for 35 years," he said, laughing. "He'll still be hanging up on people."

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    Default Re: The Fair Tax

    Update On H.R. 25 From John Linder
    Thank you for coming by my webpage to show your enthusiasm for the FairTax. This effort to abolish the IRS, save American jobs, and rescue the American economy can only happen with your and your neighbor's support, so please know how grateful I am for your interest.

    Today I am writing with just a brief update about where the FairTax stands. These last two months have been as exciting as any that we have had with the FairTax, and you are a big part of it. I have always said that the FairTax will never win alone in Washington, D.C.; instead, the FairTax will win among Americans in living rooms and at kitchen tables across this country, and the American voter will then demand action in Washington, D.C.

    In the last two months, the FairTax has put a book atop the New York Times Bestsellers list and generated unprecedented grassroots support across the nation. That grassroots support is now paying dividends in Washington, D.C. In the last 45 days we have added a record six new Congressmen and one new Senator as supporters and cosponsors of the H.R. 25/S. 25, the FairTax bill in Congress. Perhaps it was your phone call or letter to one of these offices that made the difference, so let me list the names of these new supporters below:

    Senator Tom Coburn (Oklahoma) Congressman Henry Brown (South Carolina) Congressman Dan Burton (Indiana) Congressman John Carter (Texas) Congressman John (Jimmy) Duncan (Tennessee) Congressman Duncan Hunter (California) Congressman Tom Tancredo (Colorado)

    As you can see, these members come from all parts of the country, and they have added their names to the FairTax not because I asked them to but rather because you and your neighbors-their constituents-asked them to. This is how the FairTax will come to pass in Congress.

    As of today, the FairTax has a combined 46 Congressional cosponsors in the House and Senate-more cosponsors than any other fundamental tax reform bill-and with your help, I am certain that we will add even more before the year ends.

    Let me say it again: only with your support have we achieved this much, and only with your continued enthusiasm will we ultimately succeed. Tell your family, tell your friends, tell your neighbors and tell your coworkers. Tell anyone who will listen that the American voter is running this country and that Washington will respond to the voter's demands. If your neighbor doesn't believe it, tell them this:

    From mid-May of this year through the end of September-more than four months-not a single member of Congress added his or her name to the FairTax bill. Yet, in just the last 45 days, amid a flurry of constituent phone calls, letters and town hall meetings, seven Congressmen and Senators have asked that their names be added. Why? Because politicians will listen to you! Keep talking.

    Thank you again for visiting my webpage, and feel free to forward this email to anyone who you believe will find it useful. Come back anytime to http://linder.house.gov or http://fairtaxnow.org , and, together, we will make tax reform a reality.

    Thank you,
    John Linder

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    Default Re: The Fair Tax

    Abolish the IRS
    Since 1954, the size of the United States' tax code has increased by almost 500 percent. Tax regulations created by the Internal Revenue Service have increased in volume by 939 percent, and in April 2006, Americans will spend a combined total of 6.5 billion hours, at an estimated cost of close to $500 billion, in order to simply pay for the privilege of footing Washington's bill.

    It is time for the FairTax.

    Perhaps you have heard of the FairTax by now. It is a comprehensive plan for the dissolution of the IRS that would replace all income taxes with an embedded personal consumption tax. According to the website of Americans for Fair Taxation ( www.fairtax.org ), the FairTax would abolish "personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment and corporate taxes." In their stead would be a 23 percent national sales tax on all consumption goods: a simple, one-time tax that is collected at the retail level.

    However, the FairTax is unlike the current sales taxes that exist in this country. These taxes are imposed on top of embedded income tax and compliance costs. In the FairTax Book, written by libertarian radio personality Neal Boortz and Congressman John Linder, a loaf of bread is used as an example to illustrate these hidden costs. For every loaf of bread, the seed producers pass tax costs onto consumers. The shipping company does too. In fact, processors, bakeries, distributors and grocery stores all pass a portion of their income tax burdens onto consumers, no matter how rich or poor they are. Eliminating these costs initially, by eliminating the income tax altogether, would reduce the market price of all products by an average of 22 percent.

    Don't take my word for it, though. Take the word of the Harvard Economics Department.

    So when these costs are abolished, the FairTax is added and returns the prices of consumption goods to - you guessed it - exactly where they are today. The difference is, of course, that people who are purchasing these things keep every last penny of their paychecks. For low-income families, this would mean an immediate average increase in pay of 25-30 percent.

    If you are trying to think of ways in which to oppose this plan, I need to know one thing: why?

    The federal government would still steal - I mean, collect - the same amount of tax revenue as it does today under the FairTax. The FairTax does not cut funding from any cherished socialist programs like welfare or Social Security. It is merely a new way for the federal government to pay for its existence.

    But wait, it gets better. The FairTax Act of 2005 (yes, it has already been written and is ready to be passed) also contains mechanisms for a "prebate." Based on government figures, the federal government would calculate the "annual consumption allowance" of a household - that is, the amount of money that household can be expected to spend on the necessities of life for that year - and refunds the money. Every household in America gets a tax refund, every year.

    In case you had not noticed, wealthy individuals tend to spend more money than poor individuals on consumption goods; thus, the wealthy would end up paying more in taxes than the poor. Most people seem to like this idea.

    Finally, the economic impact would be astounding. Driven by the "increasing burden of taxation and Social Security payments, combined with rising state regulatory activities and labor market restrictions," American businesses have been seeking out "tax havens" in other countries with much friendlier tax structures. The media buzzword for this phenomenon is "outsourcing," and believe it or not, our government has been causing it all along.

    Passing the FairTax Act would make the United States the "only nation in the world whose companies could sell into a global economy with no tax component in the price system." Companies would rush to bring jobs back to the United States, and their American workers would keep all of the money they earn.

    The FairTax is a typical libertarian solution to a greater social problem. Instead of promising more regulations, like many Republicrats typically do, we reduce them. It is a novel concept, I know. The results would be revolutionary.

    The FairTax is not a panacea. It does not lower taxes, and it does nothing to curb the spending orgy the Republicrats have been having in Washington. It does not stop pork barrel spending, nor does it re-evaluate how federal money is spent. The responsibility for affecting change in those areas falls squarely on us, as voters.

    However, the FairTax would be an enormous stake in the heart of the monstrosity that is the IRS. The thought is enough to make any libertarian smile happily and sleep better at night.

    We need the FairTax now.

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    Default Re: The Fair Tax

    Let’s try FairTax, flat tax
    Interest in the flat tax has been elbowed aside on Capitol Hill in favor of the FairTax concept, which is a progressive national sales tax that not only would replace the federal income tax but also could put an end to Social Security payroll taxes. Either would be an excellent replacement for the paperwork-heavy, cumbersome U.S. Tax Code.

    The advantage of the FairTax is, of course, that it is fair and simple. Only those spending $250,000 or more would pay the highest rate. Other rates would reflect spending levels, and a rebate mechanism would get money back to the poor. And, if the House and Senate get antsy about potential backlash, they could exempt taxes on food and medicines. The big plus for Uncle Sam is that the FairTax is viewed as conducive to revenue growth. Unfortunately, politicians love the complex and overwhelming U.S. Tax Code because it provides them with ways to tinker with taxes for social engineering or dispensing corporate welfare.

    And so, despite a growing number of people calling for a major overhaul of the tax system, Americans once more will have to deal in April with the voluminous code.

    When the 16th Amendment established the federal income tax in 1913, the code was only a couple of pages long and the rate was a flat 1 percent.

    Now fast forward to today. The code contains more than 3.4 million words. According to Tax Code On-Line, 7,500 letter-size pages would be needed if the code were printed 60 lines to a page. Furthermore, interpretations of the code can vary from Internal Revenue Service office to office. It has been estimated that the nation’s gross national product would increase by 10.5 percent in the first year of the FairTax. “By removing the embedded cost of the income-tax system,” says Tom Wright, executive director of FairTax.org, American-made goods would be more affordable at home and competitive abroad.

    A predictable result would be the return of more U.S. jobs from overseas. Congress has a full plate with the war in Iraq, the threat of terrorism, Medicare and Social Security and sundry other issues. But the FairTax — and, for that matter, the flat tax — should not get lost in the Capitol Hill shuffle.

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    Default Re: The Fair Tax

    I think the concept of the fair tax is great ... and I'd love to see us give it a try.

    However, here are my 2 biggest questions about the idea of switching over to it ...

    1> How exactly would the switch-over happen? When do you stop (A) collecting income taxes and (B) "turn on" the sales tax? If "A" happens too soon, then you have the possibility of a short-term bubble of poor cash flow into the government. If "B" happens too soon, then the common man will have a short-term bubble of still being burdened from having had less income (due to paying income tax) when the big increase to prices occur (due to the new sales tax).

    2> Who is going to handle the administrative task of getting rebate checks back to everyone? That sounds like a enormous logistical nightmare ... and having a government program take care of it doesn't give me the warm-fuzzies.

    -Bryk

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    Default Re: The Fair Tax

    Well, for #1, there should theoretically be no "big increase" in prices of good and services and therefore no undue burden. This is due to the fact that many goods and service providers already have a built in amount to make up for current taxes (FICA, SS, etc.) they pay. Thus, when those taxes are removed there should be a corresponding decrease in prices. This decrease is assured by the fact of natural competition. Any person that tries to tax goods and services at their current prices will soon find out that there is someone willing to undercut him and, so on and so forth. But, it is a good question. You might find a better answer at the FairTax website.

    As for #2, I would imagine that the Dept. of Treasury could handle the task. They already handle the current tax structure plus SS and other financial related government tasks. And, with the elimination of the IRS, there will be available workers able to take over the much smaller number of new positions needed to handle such disbursement.

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    Default Re: The Fair Tax

    They have a fairly good website ... I actually had a dozen-or-so questions before I used that site to educate myself.

    On #1 ... While I understand the theory, I don't think it will happen immediately. It will require something of a ramp off the old cost structures and into the new cost/pricing structures for a business to react to the changes. The goods they sell the day after the FairTax goes into effect were made with items that were purchased before, which have the old corporate tax hit woven into their costs. I find it unlikely that prices will be down-shifted on day 1 to completely offset the additional sales tax. The ramp may be fairly steep -- a 3- to 6-month ramp would be "fast" by most larger company standards. This type of change will require a painful jolt on change-over ... I'm just trying to figure out where the pain will be felt.

    On #2 ... Those agencies are used to taking money in on a monthly and quarterly basis from relatively few sources (state agencies and corporations) and paying money out (tax refunds) once a year to the masses. This system would require the government to give *everyone* a check *every* month. While reality will require them to get better at it over time, how bumpy will the first few months (or year) be here too? How many claims that some poor guy didn't get his check (and he needs it to survive) ... and how many *false* claims that someone didn't get his check?

    I do get that everything would have to get worked out in time and that the inevitable false claims should be *less* of a corruption problem than what happens with taxes today. But when the change comes (as I'm hoping it does), I hope the folks in charge of communicating with the public are very honest about the early-stage bumps that will occur.

    The pain of the change-over is not a valid reason to avoid changing (I fight this fight all the time at work). But, it does need to be planned for and understood before it hits.

    -Bryk

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    Default Re: The Fair Tax

    The Fair Tax: Stop the Tax Cheats
    The Internal Revenue Service reported [1] last week that $345 billion (not a misprint) in taxes owed for 2001 has not been collected. Not to worry, the report also indicates that IRS enforcement efforts will recover approximately $55 billion of this “tax gap.” Bully for the IRS.

    Even if the IRS is successful in recovering the amounts they seek, there is simply no way that a $290 billion shortfall can be justified regardless of how it is spun. There are several reasons why taxes rightfully owed are not collected. Many taxpayers underreport income and/or claim undeserved deductions. In other words, a lot of people cheat on their taxes. Is anyone surprised?

    Another factor that significantly affects tax compliance is the complexity of the tax code. According to a report [2] from the Americans For Fair Taxation [3], the federal tax code, rules and IRS rulings comprise more than 60,000 pages. While complexity undoubtedly leads to some paying more than they rightfully owe, that complexity also results in billions in unpaid taxes.

    The report also indicates that individuals and businesses spent over six billion hours at an estimated cost of $265 billion dollars attempting to comply with the maze of tax rules and regulations. This is equivalent to a workforce of over 2.8 million people spending the entire year doing nothing but tax compliance.

    To cover the uncollected taxes, the 130 million U. S. taxpayers are effectively subsidizing the tax cheats to the tune of over $2600 each. In other words, if the cheaters were prevented from cheating, the average taxpayer would see reduction in his or her tax bite by over 30%.

    If the tax gap and compliance costs were in and of themselves not sufficient reason to scrap the tax code, the tax code also hurts the U. S. in other ways. The income and payroll taxes ostensibly paid by businesses (but are in fact simply passed along to consumers) make U. S. products less competitive on world markets. This leads to job losses in the U. S. and, as we also saw last week, record trade deficits. The complexity of the tax code also enables politicians to reward and punish via the tax code. This is probably the single worst aspect of the U. S. tax system.

    The sheer lunacy of a tax system that fails to collect billions owed, enables political manipulation, hurts the economy and in general works against the taxpaying public is astounding.

    There is a solution however. It is a solution that would eliminate individual compliance requirements and make April 15 just another day. This solution would greatly reduce business compliance costs and similarly reduce the size and scope of the IRS. This solution would lead to job growth and economic expansion. This solution would eliminate most of the opportunities for tax cheats and political manipulation. The solution? The Fair Tax.

    The Fair Tax would eliminate all income and payroll taxes and would replace them with a national sales tax paid on the retail purchases of new goods and services. The Fair Tax protects low-income individuals and families by rebating taxes paid up to the poverty level.

    The first reaction by many people to the idea of a national sales tax is that prices of goods and service would go through the roof. Under the Fair Tax, this is not the case. Consumers are already paying for the corporate income and payroll taxes embedded in the price of virtually all goods and services. It is estimated that these embedded taxes average approximately 22% of the retail price of goods and services. Make no mistake; you are paying these hidden taxes.

    Under the Fair Tax individuals would incur no compliance costs and businesses would remit Fair Tax receipts similarly to the way state sales taxes are remitted today. No more armies of lawyers and accountants to figure out IRS regulations. The IRS (or some similar agency) would need to ensure compliance from just the approximately 25 million businesses instead of 155 million businesses and individuals, as is the case today.

    Maybe most importantly, the Fair Tax would eliminate the patently unfair manipulations of the tax code that Congress uses to hand out favors to wealthy constituents and lobbyists. The elimination of the incentive and ability to tinker with the tax code would go much farther toward making members of Congress more “ethical” than any other type of reform.

    The Fair Tax has been introduced in both the House (H. R. 25) and Senate (S. 25). The House version already has 48 cosponsors. The Americans for Fair Taxation estimate that it would require just 3000 active supporters in each congressional district to make the Fair Tax a reality. Each of the 435 districts represents approximately 300,000 taxpayers. That means that if just one percent of taxpayers became vocal supporters of the Fair Tax and took the time to write and/or call their representatives in Washington, the Fair Tax could become law.

    The Fair Tax would be the most significant tax reform since the Boston Tea Party. Don’t leave this reform to others. Take a few minutes to let those in Washington know that the time for the Fair Tax is now. Think about that as you pore over your 1040 this year.

    [1] http://www.irs.gov/newsroom/article/...154496,00.html

    [2] http://www.fairtax.org/pdfs/Tax_compliance_facts.pdf

    [3] http://www.fairtax.org

    About the Writer: Jan A. Larson is currently employed in private industry in Texas. He holds a bachelor of science degree from the University of Nebraska, a master of science degree from the University of Kansas, and an MBA from Colorado State University. jan@pieofknowledge.com

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    Default Re: The Fair Tax

    Done and done Ryan. Thanks for the links.
    Brian Baldwin

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    Default Re: The Fair Tax

    Quote Originally Posted by Brykovian
    I think the concept of the fair tax is great ... and I'd love to see us give it a try.

    However, here are my 2 biggest questions about the idea of switching over to it ...

    1> How exactly would the switch-over happen? When do you stop (A) collecting income taxes and (B) "turn on" the sales tax? If "A" happens too soon, then you have the possibility of a short-term bubble of poor cash flow into the government. If "B" happens too soon, then the common man will have a short-term bubble of still being burdened from having had less income (due to paying income tax) when the big increase to prices occur (due to the new sales tax).
    January first of any year. Since it will be known in advance there is no significant bubble. On the first of january the prebate payments arrive. No cash flow problem for anyone. Within two years of the switch, no more IRS.

    2> Who is going to handle the administrative task of getting rebate checks back to everyone? That sounds like a enormous logistical nightmare ... and having a government program take care of it doesn't give me the warm-fuzzies.
    The logistics are miniscule compared to the logistics of tracking and reconciling income from all employers and financial institutions.

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    Default Re: The Fair Tax

    Quote Originally Posted by Brykovian
    They have a fairly good website ... I actually had a dozen-or-so questions before I used that site to educate myself.

    On #1 ... While I understand the theory, I don't think it will happen immediately. It will require something of a ramp off the old cost structures and into the new cost/pricing structures for a business to react to the changes. The goods they sell the day after the FairTax goes into effect were made with items that were purchased before, which have the old corporate tax hit woven into their costs. I find it unlikely that prices will be down-shifted on day 1 to completely offset the additional sales tax. The ramp may be fairly steep -- a 3- to 6-month ramp would be "fast" by most larger company standards. This type of change will require a painful jolt on change-over ... I'm just trying to figure out where the pain will be felt.
    It would be a few days to weeks at the very most. It is far more likely that you will see ad campaigns leading up to the switch talking about price roll backs. We live in a competitive economic society. The idea that retailers would see some kind of windfall is fantasy.

    On #2 ... Those agencies are used to taking money in on a monthly and quarterly basis from relatively few sources (state agencies and corporations) and paying money out (tax refunds) once a year to the masses. This system would require the government to give *everyone* a check *every* month. While reality will require them to get better at it over time, how bumpy will the first few months (or year) be here too? How many claims that some poor guy didn't get his check (and he needs it to survive) ... and how many *false* claims that someone didn't get his check?
    Relatively few sources? Try every single employer in the country.

    False claims will be tried because lots of people are basically scum. But, put some real teeth in the regs, if someone files a false claim then they forfeit their prebates for the rest of their life. A few high profile examples and it would drop to noise level.

    I do get that everything would have to get worked out in time and that the inevitable false claims should be *less* of a corruption problem than what happens with taxes today. But when the change comes (as I'm hoping it does), I hope the folks in charge of communicating with the public are very honest about the early-stage bumps that will occur.
    Honest? Absolutely! But there are fewer problems with this than those who like the current socialist system will admit.

    The pain of the change-over is not a valid reason to avoid changing (I fight this fight all the time at work). But, it does need to be planned for and understood before it hits.

    -Bryk
    Especially since the pain is minimal and the benefits to the economy and country are huge!

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    Default Re: The Fair Tax

    Hi Dan ...

    Thanks for the thoughtful replies.

    Quote Originally Posted by DanSmythe
    January first of any year. Since it will be known in advance there is no significant bubble. On the first of january the prebate payments arrive. No cash flow problem for anyone.
    Thanks for this point ... I hadn't even considered that the checks arrive *before* the taxable month in question ... guess the "pre" in prebate shoulda tipped me off, eh? Sometimes there are forests full of trees I'm told!

    Quote Originally Posted by DanSmythe
    It would be a few days to weeks at the very most. It is far more likely that you will see ad campaigns leading up to the switch talking about price roll backs. We live in a competitive economic society. The idea that retailers would see some kind of windfall is fantasy.
    A proper timeframe, with communication, leading up to the change-over will help ... a point I was trying to make when first posting (although on re-reading I didn't make it very clearly).

    As for windfalls ... I'm personally not even concerned about that sort of thing. I was just thinking more along the lines of risk-averse companies trying to defend their bottom lines, more than extra earnings.

    Relatively few sources? Try every single employer in the country.
    Yeah ... Emphasis on "relatively". Compared to the total number of taxable individuals in the country, there are *relatively* few employers.

    Sending prebate checks, the way I see it, is comparable to the once-a-year sending out of tax rebates ... except that not everyone gets a rebate every year. So, now we would be giving out more checks each month than what is given out once a year right now. Not impossible, but I think a bigger logicistical headache than is currently being undertaken.

    But that's just cutting checks. When taking the whole collection-reimbursal cycle into account, the FairTax plan looks to be overall simpler, because of the greatly reduced logistics in collection of the taxes (getting them from companies that already collect and pay state sales tax, for the most part).

    Especially since the pain is minimal and the benefits to the economy and country are huge!
    I agree about the huge benefits ... greatly outweighing the pain. But I still can't see the pain as being "minimal". I see it more like agreeing to undergo dental surgery (non-minimal short-term pain) so that you can eat properly and pain-free for the rest of your life (big-time payoff).

    Thanks again, Dan ... good things to think about. I hope to see it happen in my lifetime ... love to leave that sort of thing for my kids.

    -Bryk

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    Default Re: The Fair Tax

    FairTax Offers More Freedom, More Wealth
    Please do this experiment with me. Take a look at your last week's pay stub. See that nice big figure on top? O.K. I know it's customary to complain about salaries. See that relatively nice big figure on top? Now look at all the figures below that start eating away at your pay, leaving you with the hungry little number at the bottom. Draw a line through all those pay-stealing numbers and circle your gross pay in red. That's the amount you would receive under the FairTax.

    That's right. No deductions for Social Security, no income tax, no payroll tax. No federal tax of any kind. Of course, if you have deductions for health insurance, IRA or any other saving plan, they would remain, as well as any state tax.

    It's your money. Why should you have to hand it over to Uncle Sam? O.K. We do need government for some things -- like defense.

    But that's not even the point. Under the FairTax, government would still receive the same amount of revenue that it receives now -- from a national consumption tax. Imagine -- no more Big Brother IRS looking over your shoulder, harassing you for every clerical error. No more politicians micromanaging your life by giving you tax breaks if you live your life according to their whims, or punishing you if you don't.

    You get to choose when and for what you pay tax. Only new goods and services would be taxed, not income, and not used goods. The poor would still get a break -- in fact, they would be better off, along with most taxpayers and the entire U.S. economy. Every household would receive a monthly pre-bate equal to the taxes on necessities up to the poverty level.

    Not only that -- every item would be cheaper, because built-in federal taxes would be eliminated -- so the poor would have more money to pay for cheaper goods. Of course there's no free lunch -- the sales tax would be hefty -- 23 percent. But the benefits would be substantial.

    For instance: With the elimination of the enormous, bulky IRS monster, the cost of tax compliance would be drastically reduced. Today, hidden income taxes and the cost of complying with the federal income tax represents 20 percent of all retail prices. Built-in taxes raise the price of everything you buy. Corporations simply pass the cost along to the consumer. With those built-in taxes eliminated, prices will fall.

    And that creates another bonus -- increased exports of U.S. products, not U.S. jobs. When products become cheaper due to the absence of built-in taxes, they will be more attractive in overseas markets. That benefits the domestic work force. At the same time, foreign goods would become more expensive, because the FairTax would be applied to them. That would further increase U.S. exports.

    The FairTax would also tap a new, unexpected revenue source -- criminal activity. Criminal wealth is currently not taxed, because criminal income, of course, is not reported. But when criminals spend their ill-gotten gain for new goods and services, that money would be taxed. This untapped criminal revenue is conservatively estimated at one trillion dollars.

    Finally, the IRS estimates that 25 percent of taxpayers avoid paying their fair share. The FairTax would be significantly more difficult to avoid, less cumbersome, less onerous, and would no doubt encourage more compliance.

    Because the FairTax would be, well, fair.

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    Default Re: The Fair Tax

    The Idea Of A National Sales Tax Is Gaining Acceptance In Washington
    If U.S. Rep. John Linder (R-Ga.) has his way, April 15 will no longer be a dreaded day on the calendar; the only Americans paying taxes on that day would be those who go shopping.

    That's because Mr. Linder wants to replace the current federal income tax system (personal taxes, payroll taxes, corporate taxes, all of it) with a 23 percent national sales tax. The tax would be collected at the point of sale for new goods and services, and it would appear on every retail receipt. Each American would choose how much he pays in taxes by deciding how much to spend, and each American would receive a rebate for spending on necessities up to a poverty-line level of consumption.

    Mr. Linder's radical bill is a long way from becoming law, but it does seem to be picking up some steam in Washington and around the country. Mr. Linder now has a seat on the House Ways and Means Committee, which writes tax laws, and his "FairTax" bill has over 50 House co-sponsors. The FairTax Book by Mr. Linder and radio talk-show host Neil Boortz made The New York Times bestseller list when it was released last year.

    FairTax advocates make a strong economic case for their reform plan. A national sales tax, they say, would free up the hundreds of billions of dollars in compliance costs exacted by the current system, not to mention all the hours wasted on filling out tax forms. Dropping the tax on capital and labor would also spur growth, they argue, and encourage wealthy Americans to bring home money in overseas accounts and foreign companies to locate factories here. The FairTax would also turn the tens of millions of foreigners who visit the United States each year into U.S. taxpayers every time they buy something.

    But beyond arguments about efficiency, the FairTax could also have positive cultural and moral consequences: In a nation of unrestrained consumer appetites, a national sales tax would put government policy squarely on the side of thrift. It would be a tax on ostentation and conspicuous consumption, two vices so prevalent in American culture that they are no longer even seen as vices.

    The purchase, for example, of fancy, status-symbol vehicles that are meant to make neighbors envious would face a tax, but the productive work and investment that serves neighbors would not. America's favorite hobby, piling up debt on credit cards, would be discouraged, while the quaint notion of saving part of one's paycheck would be encouraged.

    "There is an old adage," said Rep. Gil Gutknecht (R-Minn.), a FairTax co-sponsor, "that if you want more of something, you should subsidize it. If you want less of something, you should tax it. And what do we do in America? We tax income. We tax investment. We tax savings. We tax productivity. We tax all the things we want more of, and yet we subsidize consumption, indirectly."

    But not all conservatives are on board with the FairTax. Flat-tax advocates like Steve Forbes worry that Mr. Linder's sales tax, if unaccompanied by a repeal of the 16th Amendment (which gives Congress the authority to tax incomes), would leave the door open to a European-style system of both consumption and income taxes; the temptation to restart the income tax would be tremendous for big-spending politicians, they say, and the country could end up with a tax structure far worse than what it has today.

    This debate between competing tax reforms has been brewing in conservative circles for a decade, and it's one worth having again during a campaign season. Don't be surprised if you hear more about it as the 2008 presidential campaign approaches.

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    Default Re: The Fair Tax

    Auctioning Of The Tax Code
    With millions of Americans once again struggling to complete their federal income taxes, it is a good time to reflect on the profoundly dysfunctional and highly punitive federal tax code that only gets more complicated year after year.

    The patchwork quilt of tax loopholes, exclusions, adjustments and various forms and schedules that we all struggle to understand is a reflection of the wholesale auctioning off of the tax code over the last several decades at the hands of an army of powerful, well-heeled lobbyists. The hallway in front of the tax code-writing House Ways and Means Committee where they practice their lavishly compensated trade has even been dubbed "Gucci Gulch" in recognition of the $1,000 shoes worn by many lobbyists.

    Tax policy is big business in Washington. Members of the House Ways and Means Committee and the Senate Finance Committee and their staff are routinely paid signing bonuses of a million dollars and more when they join powerful Washington lobbying firms. Recent revelations about the clout of some Washington lobbyists pale in comparison to the real and hidden influence of tax lobbyists on both citizens' responsibilities to the national government and the nation's economic well-being. It is little wonder that these staffers and their bosses so passionately object to efforts to win fundamental reforms.

    Unfortunately, Americans have learned to fear "tax simplification" because the tax code always gets more, not less, complicated in the lobbyists' hands. The code is so complex that even the Internal Revenue Service fails about half of the time to accurately answer taxpayers' questions, and even H&R Block has been fined for getting its own taxes wrong.

    This complexity gives rise to another staggering $265 billion a year in tax compliance costs by legions of frustrated citizens and busy auditors, tax preparers, lawyers and corporate compliance specialists. Compliance costs alone represent a greater sum than the combined annual revenues of Sears, Walt Disney, Microsoft, Rite Aid and McDonald's. That honest citizens must spend so much time and money in order to comply with a federal law is an indignity that seems lost on many critics of a national sales tax.

    As the founder of a national campaign to replace the income tax with a transparent, simple and non-regressive national sales tax, I have seen first hand the lengths that both elected officials and the entourage fed by the tax code will go to defend their turf. In recent deliberations by the President's Advisory Panel on Tax Reform, for example, millions of dollars of top level research by recognized economists supporting the FairTax proposal was simply swept under the rug. The panel was charged with suggesting fundamental reform but failed to deliver under the leadership of two former U.S. senators -- both of whom who work in firms lobbying the tax code.

    When we began our work at FairTax.Org, we naively thought that our common-sense proposal of a national sales tax that eliminates the IRS, un-taxes the poor, favors American producers and is simple enough to be understood by a child would be welcomed by our elected officials. To date, more than 55 courageous members of the Congress agree. But, we have now come to understand that nothing less than a national roar of citizen condemnation will force reform.

    Once upon a time our tax policy may have been intended to spur growth in segments of the economy while fairly funding the government. Today it is simply a lucrative Washington business that specializes in shearing taxpaying sheep while rewarding those wealthy enough to buy into the corrupt auction of taxpayer's wealth. This assault on taxpayers and the nation's best interests cries out for fundamental reform.

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    Default Re: The Fair Tax

    Canada's new prime minister is already taking steps that we should take. Do away with lobbyists and the such in order to recapture our nation. If we could put into office those that will do what we want then the Fair tax and other such things could be enacted easily.
    Brian Baldwin

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    Default Re: The Fair Tax

    "Fair Tax" Promotes Better Compliance, Smaller IRS
    John Collet of Americans for Fair Taxation presented their ideas to a small crowd Tuesday, March 28 at UMKC in Kansas City, Mo. If this Houston-based organization had their way, the Internal Revenue Service would be a thing of the past and more high income taxpayers would pony up their fair share of taxes.

    The FairTax replaces the income tax and all other federal taxes with a national consumption tax. The FairTax is levied only once, at the point of purchase on new goods and services.

    The group admits it will be difficult for legislators to face down entrenched special interest groups, but they initially proposed replacing the current system with U.S. Senate bill S. 25 and U.S. House of Representatives bill H.R. 25. The next step would be to repeal the 16th Amendment to the constitution allowing the Federal government to levy an income tax.

    Signatories to the original petition include noted academic economists and practitioners who feel the current tax code cannot simply be fixed. The current regs include 54,000 pages, approximately 2.8 million words of mind-numbing rules, exceptions and special interest loopholes. This tangled web would be replaced by a simple national sales tax similar to that paid to the county, city or, in the case of our own Hawthorne TDD, the subdivision.

    But what about poor people? The FairTax provides every family with a rebate of the sales tax on spending up to the federal poverty level (plus an extra amount to prevent any marriage penalty). The rebate is paid monthly in advance. It allows a family of four to spend $25,660 tax free each year. The rebate for a married couple with two children is $492 per month ($5,902 annually). Therefore, no family pays federal sales tax on essential goods and services and middle-class families are effectively exempted on a big part of their annual spending.

    But what about the administrative burden of collecting the tax, now falling on the IRS? States can elect to collect the federal sales tax on behalf of the federal government in exchange for a fee of one-quarter of one percent of gross collections. Retail businesses collecting the tax also get the same administrative fee.

    One of the biggest results of the Fair Tax would be to make it more difficult to evade taxes through shelters and other schemes. According to former IRS boss Charles Rossotti, people who actually pay taxes are cheated nearly $300 billion by those who do not pay all their taxes. This means we would enjoy a 20 percent decrease in what we have to pay if everyone paid their fair share.

    Charities, which theoretically enjoy the benefits of our tax deduction for contributions, also would benefit under the FairTax. After the 1986 Tax Reform Act, charitable giving increased rather than decreased, despite lowering marginal income and transfer tax rates. Charitable giving rose by $6.4 billion, or 7.6 percent, in 1987 after the top tax rate fell from 50 to 28 percent (more than doubling the tax price of giving). The message is that increasing disposable incomes allows more giving, should citizens decide to do that.

    Perhaps one of the worst drawbacks of the current tax system, with its preferences for certain industries and citizen expenditures, is that it distorts the price system of allocating resources to an activity. By removing the twisted incentives of the tax code, the FairTax people hope to accomplish a better use of resources.

    Many citizens support the FairTax idea, too. Although many people who would favor such a system look at it from the perspective of making paying taxes simpler, that also represents a huge savings in national resources. If people are not forced to support a massive army of accountants to take care of their taxes, and instead use those resources for something else, the reallocation could potentially benefit all Americans and make our economy more competitive.

    A tax every time you pay for your groceries also helps keep in front of taxpayers exactly how much they really pay in taxes. Seeing it come out of your pocket provides a rarely cited psychological advantage of causing people to bulk at every attempt to increase their taxes. Having taxes come out of a check when you never see the full amount makes it easier for Uncle Sam to pilfer your earnings.

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    Default Re: The Fair Tax

    Good News on FairTax
    Once again this year the college basketball tournaments, often referred to as “March Madness,” provided thrills and excitement to basketball fans. The tournaments featured the drama of close games, overtime buzzer-beaters, Cinderella stories and underdog victories, all the way to the Final Four. Our annual April Madness – filing our income taxes – has no drama, no Cinderella stories, and the only underdog is the taxpayer. The “Final Four” are likely the only dollars you will have left after April 15. It’s April Madness time again.

    There is good news and bad news regarding taxation at the federal and state levels when compared to the situation one year ago.

    The first good news is that the 2003 tax rate cuts on income, capital gains and dividends have produced historical economic growth, and that growth is projected to last into 2006. Gross Domestic Product has grown for 17 consecutive quarters, the unemployment rate is lower than the decade rates of the 1970s, 1980s and 1990s and manufacturing productivity is rising. These and numerous other measures of economic growth have caused tax revenue from businesses and individuals to increase over 10 percent from the same period last year.

    Second, many states are considering tax and spending limitation legislation to rein in out-of-control spending and return wasted tax dollars to the taxpayers. Wisconsin, Ohio, Michigan, Georgia and Texas are just a few of the states where taxpayers have finally said enough is enough. Constituent-led grassroots movements in these and other states are shining the light on decades of wasteful spending at the state level and demanding accountability.

    The third piece of good news is that support is growing for complete replacement of the tax code with a national consumption tax. More and more taxpayers are demanding action from their representatives in Congress, and their representatives are listening.

    Just one year ago, there were 33 sponsors and co-sponsors of HR 25, The FairTax Act, in the U.S. House. Now there are 53 supporters, and new co-sponsors are joining every month. In the Senate, Senator Saxby Chambliss (R-GA) was the lone sponsor of the FairTax Act, S 25, one year ago. Senators Tom Coburn (R-OK) and John Cornyn (R-TX) now join Senator Chambliss as co-sponsors. The word is spreading about the overwhelming benefits to our economy and our wallets when we replace the nine-million-word tax code mess with the fair and simple FairTax.

    The first example of bad news regarding taxation is that Congress still has not had the courage to make the 2003 rate cuts on income, capital gains and dividends permanent, and they haven’t permanently repealed the estate tax. As noted above, the 2003 tax rate cuts are responsible for the stable and growing economy. Yet Republican leadership in the House and Senate continues to face unwavering opposition to further tax rate cuts from Democrats and even some Republicans who continue the class-warfare claim that low taxes somehow hurt the poor and middle-class. They repeat this lie despite the fact that two million jobs were created in 2005, and virtually every American who wants a job can find one.

    Another story of bad news is that the income tax code becomes more complex each year. Our income tax code is so complicated that many tax-preparation professionals cannot accurately file tax forms. A March 2006 story in USA Today indicated that 29 companies this year have already admitted to accounting mistakes on their tax forms, including the tax preparation firm H&R Block. H&R Block was forced to restate earnings after underestimating its fiscal year 2004 and 2005 earnings by $32 million.

    An April Wall Street Journal story reported that tax preparation firms are also failing to accurately complete their clients’ tax returns. The Government Accountability Office (GAO) found that 10 of 19 commercial tax preparation outlets failed to report all income supplied by undercover GAO investigators, and some neglected to claim all the deductions available. What was the Senate’s response to the GAO findings? Instead of getting to work on creating a tax code that even the professionals can decipher, the Senate held hearings that will likely result in more regulations on the tax preparation industry. This will only mean more complexity and costs passed on to taxpayers.

    The bottom line is that the income tax code is a disaster. More regulations and tinkering with deductions, credits and income brackets will only make the disaster worse. The slam-dunk fix for the income tax code mess is to completely replace it with the FairTax.

    Stop the madness.

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