October 23, 2009

Can the FairTax Reverse the Explosion of Our National Debt?

Our country is on the Path of Unsustainable Debt.

Experts and average people alike worry that the United States is headed for second rate status as a world power because we are "mortgaged" to the hilt to foreign creditors. One recent USA Today analysis found that our real federal debt amounted to more than $500,000 per American household. Much of the true federal (American taxpayer) debt is not even commonly tallied--such as more than $32 trillion in pending Social Security obligations. In addition to its other advantages, the FairTax is the easiest, simplest and best way to expose the true cost of government in every purchase --leading to voter awareness that will restrain politician’s penchant for spending money we don’t have.

Never before has the world seen its richest and most powerful nation so deeply in debt to even the poorest of countries. It is bad enough that we owe a trillion dollars to China, but we even owe money to Botswana!

Today there are few politicians from either political party who can resist the easy reelection strategy of promising and legislating more and more spending. More worrisome is the fact that for many in the voting public, such spending seems divorced from our own earnings. The idea that government spending must eventually come from our own paychecks is obscured because our taxes are largely hidden from sight through payroll withholding and payroll taxes. Thus, many celebrate the refund of a few hundred dollars after April 15th but overlook the fact their refund is but a tiny piece of the thousands of dollars that have been withheld from their paychecks throughout the year. What we are actually doing is making a big interest free loan to our government throughout the year.

Few members of the public would agree that the lucrative industry that has grown up around the tax code justifies the damage to our economy caused by the income tax system. It's a really attractive system for a very small population of both Republicans and Democrats in Washington, D.C. and a really bad deal for all the rest of us. Love of power over the tax system and the profits derived from those close to the inner workings of these Congressional committees unite both Democrats and Republicans in Washington--and makes clear the distance between what is good for these few and what is good for the nation.

Because our taxes become obvious with every purchase under the FairTax--instead of hidden from us in payroll taxes--we will all begin to see the true cost of the federal government every time we shop. It's right there on every receipt instead of hidden from us through payroll withholding. Many believe that when we finally "connect" the cost of the federal government with what comes out of our personal spending, a far different attitude about vote-buying spending promises will make "earmarks" like the "bridge to nowhere" a thing of the past. Families well understand that incurring debt beyond one's ability to pay is a dangerous path. The FairTax makes obvious how much our government costs us, making unchecked government spending recognized as equally irresponsible and makes it far less acceptable to the American public. The FairTax is the most direct path to healing our nation's finances.
 
Sources: USA Today: Dennis Cauchon, "Leap in U.S. Debt Hits Taxpayers with 12% More Red Ink", USA Today, May 5, 2009.

Who holds America's Debt? http://www.treas.gov/tic/mfh.txt

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Question of the Week

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In last week's question of the week, we asked: Does the income tax system survive because of the narrow self-interest of Washington "insiders"?

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FairTax in the News

Putting My Head Where My Heart Is

Former Dallas Federal Reserve Member, Bob McTeer, makes clear on his informative blog site where his head and his heart are--with the FairTax. Catch his take on any number of issues at http://taxesandbudget-blog.ncpa.org/putting-my-head-where-my-heart-is/.

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Motorcycle Fans Get Political On FairTax

Friday, October 16, 2009 11:05:18 AM from Central Florida News 13.
Reported by Margaret Kavanaugh

DAYTONA BEACH -- Friday morning some motorcycle lovers are taking to the streets for a very political cause -- rallying for tax reform. The bikers want to show their support for the FairTax Act currently being considered by Congress. Representatives said Biketoberfest is a perfect opportunity for them to get their views heard. Supporters of the FairTax Act believe that replacing income tax with a national sales tax would greatly improve the economy of the United States. One biker News 13 spoke with said bikers love freedom, and that's why they are supporting this issue. "We need more freedom, more money in our pockets. This is a real stimulus because you take your whole paycheck home," Said Mike McClain, a supporter of the FairTax Act. Participants in the rally are meeting at City Island around 9:40 a.m. to start the ride. McClain said that next year they are planning on taking their campaign on the road to 48 states.

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