Fair Tax

The Fair Tax is exactly what it is said to be. It is fair because everyone pays. It is an embedded 23% tax on all retail goods and services. This means that the tax is included in the price of the item prior to its purchase. We currently have embedded taxes (payroll tax, corporate tax, etc). Corporations do not pay these taxes but pass them on to consumers in the price of the item.

It is estimated that average tax burden on any item is 22%. These burdens would be lifted by the FairTax. The FairTax would then replace that 22% and the product end price would end up at about the same price as it was prior to the FairTax. The main difference for the consumer is that they would have their entire pay check to spend not just the Net= (gross -taxes).

The consumer also gets a prebate from the government each month. This prebate is the calculated poverty level associated tax burden for existing. That means for those individuals that are near that level or below they would esssentially have a zero tax burden. The formula is based on necessary consumption and the tax that would be imposed on those items. So that if you said that it was necessary to buy 100 dollars in groceries and the tax on that was 23 dollars the prebate would include that amount. It is all listed in a federal table. The amount changes depending on your status (married, single, how many children).

The cost of implementing this program is minimal since most states and businesses already have similar programs inplace to collect sales tax. Not to mention the saving by reducing the size of the IRS. The only filing requirement is one of your status (married, single, etc). The IRS would need to make sure that the appropriate collection was occuring but this would take less personnel than currently employed. The IRS workers that would be diplaced could work for corporations or states to help implement the Fair Tax.

One could argue that business will just take the 22% profit margin from the elimination of the payroll tax, corporate tax, etc and then products woudl be more expensive by 23%. This may happen for a while but eventually some corporatation will try to gain market share by reducing its price this will cause other to follow. IF not the corporation will be making money and this will boost profits and therefore allow them to hire more people to work or pay larger dividens or salaries. This would benefit the work force. So either way this improves the overall economy.

Not to mention that it brings in the same money currently coming into the Treasury from all the other taxes combined. It would also give congress an incentive to keep GDP (at least the private sector) growing since this would increase money coming into the Treasury.

The FairTax would also make our products more competitve overseas since the 22% current embedded tax would be eliminated. The sales tax portion would not apply overseas so when Europe added the VAT tax to our products we would be cheaper or same price as European items.

FairTAx is the way to go.

Come on America lets make change happen but this time lets do it right.

For more details on the fair tax and other suggestions:

Buy the book : Prescription for Saving The United States: The Great Republic