A tax code we can all agree upon
originally published by the Vail Daily
My last commentary focused on one of our presidential candidates and as expected, was met with both agreement and dissent. During an election year, commentary about any particular candidate is certain to rouse, please or anger someone. With that in mind (and the fact that it’s almost April 15 — tax day) today’s commentary is about a topic most of us can agree upon, i.e., that the current U.S. tax code is archaic, unworkable and needs to be revamped with bipartisan support from the Congress.
America faces new challenges in the global economy. For example, how can we as a nation retain jobs, stimulate investment, fund the functions of government, reduce the influence of lobbyists, induce Americans to save more and provide an incentive for immigrants to come here legally? Some think more government regulation is the answer; but there’s another school of thought that feels the best way for America to meet each of those challenges is by radically changing the way we are taxed.
The 16th Amendment gave Congress the power to tax income, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.” But the dynamic that existed when the amendment was ratified in February 1913 has long since faded into the history books. Ninety-five years after its ratification, the rationale behind the 16th Amendment no longer exists.
Today, instead of the simple taxing mechanism Congress envisioned, our tax code has expanded to become a 67,000-page “magilla” that is incomprehensible, riddled with loopholes and lobbyists friendly. Conversely, one needn’t be a contract lawyer or a professor of economics to understand the 132-page FairTax Act (HR 25, S 1025).
If one actually takes the time to read and understand the FairTax, (instead of dismissing it as just another consumption tax) they will appreciate how this proposal, if enacted, will unleash the power of the American economy. Obviously, all of the benefits of the FairTax proposal are too numerous to detail here, nevertheless, it’s important to recognize that this proposal is A) predicated upon the creation of incentives, and B) a comprehensive nonpartisan plan to replace federal income and payroll taxes, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes.
The FairTax proposal is revenue neutral and contains a mechanism to ensure no American pays tax on necessities, i.e., the FairTax Plan provides a prepaid, monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level.
The FairTax uses several mechanisms to untax the poor, lower the tax burden on most, and still make the overall rate progressive. However, the progressive tax rate is based on lifestyle and spending choices rather than earnings, which all too often penalizes hard work and provides a disincentive for achievement.
It’s hoped here that those unfamiliar with the FairTax will not be duped by some of the bogus criticisms of the FairTax Plan, i.e. that the 23-percent consumption tax rate is misleading, that it’s not enforceable and will not be revenue neutral or that it is regressive and shifts the tax burden onto lower- and middle-income people. Whether these assertions are intended to mislead or if they are proffered because FairTax opponents simply don’t understand the plan is unknowable. However, each of these myths is addressed and dispelled in the book, “FairTax, the Truth” published in 2007.
The first book on the topic, “The FairTax” was published three years ago and details how it will turn America into a tax haven for the world. It illustrates how the resulting capital infusion will create jobs, consumption, and revenues to expand our economy and fund our ever increasing entitlement program commitments.
But a word of caution is in order — do not confuse the FairTax with the “Flat Tax,” the “No Tax Plan” or the Citizens for an Alternative Tax System, i.e. “CATS”, which has been linked to the Church of Scientology.
A 725-word commentary cannot possibly accommodate a complete dissertation of the 132-page FairTax plan; but as more and more citizens come to understand it, it is becoming obvious that this proposal transcends party lines and is clearly an idea whose time has come. For more information, visit the website, www.FairTax.org.
Quote of the Day: “Why does a slight tax increase cost you two hundred dollars but a substantial tax cut saves you thirty cents?”—P. Bracken
Originally published by the Vail Daily: http://www.vaildaily.com/article/20080409/EDITS/342397924http://www.vaildaily.com/article/20080409/EDITS/342397924