Ditch the income tax, adopt FairTax
In concept, the FairTax plan is simple. Abolish the income tax completely, and get rid of the Internal Revenue Service. Repeal the 16th Amendment so income cannot be taxed. Replace the income tax revenue with an equal amount using a national sales tax. Same tax dollars, a different point of collection.
It is what the above actions affect that can become a little complex.
Because the FairTax removes the tax and the compliance costs from business, it has certainty in its future, enabling it to grow as consumer demand calls for more products or services. The reduced costs make our exports competitive with the foreign competition increasing demand for the "Made in America" label. This will cause more job growth here. Elimination of the tax on business will mean we become the business haven of the world bringing back a good portion of the $11-$13 trillion hidden from the income tax as well as money from foreign investors.
The costs of everything we produce will be lower before the FairTax is added, and every wage earner will take home a paycheck without any federal deductions. The average person in the 15 percent bracket sees a 29 percent increase in take-home dollars.
The FairTax is established to be administered equally to all. No favors, loopholes or exemptions. It is transparent, and every purchase has the tax paid on the receipt. No one files a federal tax return. The business taxes that are now passed through the supply chain and paid by the consumer go away. There are no taxes on anything in the supply chain. Only items sold to the end user are taxed. The only exceptions are used goods and education. Nothing is taxed more than once. Appliances, cars, clothes, homes, boats, etc., are not taxed if they were used.
The tax rate is 23 cents of each dollar, but the effective tax rate for most people above the poverty threshold will be about 11 percent. No tax is to be paid on basic essentials. To keep loopholes out, tax is paid at the register but all qualified people can receive the prebate compensating them in advance each month for the tax paid on essentials.
Social Security and Medicare have stronger funding. Now it is funded by the 100 million to 120 million legitimate workers depending on the employment level. Under the FairTax when a new good or service is purchased by any consumer, the consumer contributes to the fund. Those who used to avoid the income tax by not reporting their income now pay when they buy stuff.
Of the $20 million in research done by economic professors, one of the discoveries is that consumption is a more stable source of revenue than income.
More information including the research papers are available at www.fairtax.org. Questions may be sent to me at email@example.com. The FairTax organization holds meetings in Oviedo, Longwood and downtown Orlando each month.
This article is published online, here.