The Fair Tax Plan

From Neal Boortz:

"Just in case you haven't picked up on this yet, I'm completely and passionately dedicated to the idea of the FairTax. I've been studying the idea of replacing the income tax with a consumption tax for over 25 years, and the FairTax is as close as I've seen, and as close as I believe we can get to a fair and effective plan. I understand, and I'm sure you understand, that the FairTax is not the perfect answer. It is merely the best answer.
Our current corporate and personal income tax structure is alienating the American people, chasing American business and capital out of this country, and choking our economy. This is a tax structure that was devised by politicians for politicians. There are politicians in Washington DC who view our current tax structure as the best vote-buying tool they have at their disposal. These politicians work tirelessly to manipulate and amend our current tax code so as to benefit those taxpayers whom they view as supporters, more often than not to the detriment of those whom they view as potential opponents. It just should not be this way. The Washington culture should not support literally thousands of K Street denizens who make hundreds of thousands of dollars each and every year doing just one thing -- gaming and manipulating our current tax structure for the benefit of their deep-pocket clients. These politicians and their remora lobbyists actually view every single dollar you earn as belonging to them. Their concerns are twofold: First, figuring our just how much of your money they can keep without running the risk of an open tax revolt; and secondly, trying to figure out just how to distribute the money they keep so as to maximize the political benefits that flow from government spending.
It should not be this way. America deserves better. We all know that the basic functions of the federal government need to be funded, and that it will take some system of taxation to do it. All Americans ask is that the method of taxation be fair, evenhanded, and easy to understand. We will gladly pay for the essential functions of government so long as we don't suspect that our money is being used instead to buy political advantage or to pay for past favors.
This is why I am so passionate about the FairTax. This is a tax system that was devised by economists, business people and ordinary American citizens, not by politicians. The goal was simple: Develop a system of taxation that is easy to understand, that treats every American exactly the same, that funds the federal government at its current funding level, and that does not empower politicians. Where every other tax reform idea fails, the The FairTax succeeds in meeting this criteria. It was during one particular focus group involving ordinary citizens that one participant said "This plan is so simple that you should just call it the Fair Tax." Hence the name.
You know what the FairTax plan is. Let me tell you what it is not. The FairTax is not a "something for nothing" tax scheme. We aren't promising you extra dollars in your pocket or a new car in your driveway. The promise is simple. Your earnings will remain essentially the same, and you will spend essentially the same amount for your consumer goods and services. You won't pay taxes on your investment earnings, nor will you pay taxes when you give money away as a gift. Your heirs won't pay taxes when you go tango uniform and they inherit the wealth you've worked so hard to acquire. You won't fall victim to the Alternative Minimum Tax or an IRS audit. You will be compensated at the beginning of every month for the FairTax you would be expected to pay during that month on the basic necessities of life, as set by the poverty level for your sized household. As they say, "there ain't no such thing as a free lunch," and that applies to the FairTax, unless you want to consider treating April 15th as just another Spring day as something you get for free.
Now .. let me modify that "we aren't promising you extra dollars in your pocket" line. Under the FairTax our economic future would look quite bright indeed, so bright that, in fact, you will almost certainly benefit in the long run. Economists estimate that American businesses and individuals spend anywhere from $200 to $500 billion dollars a year just to comply with our tax laws. These figures vary because the definition of tax compliance expenses change from study to study. So, pick a number between 200 and 500 billion. That's the amount of money that flows back into our economy with the implementation of the FairTax. Consider also the ten trillion dollars in American dollars that have fled the United States to work in capital markets overseas. Why were these dollars sent to work outside of our system? They were sent overseas to because to work because the return would be higher outside the crushing burden of the United States tax code. You don't have to be an economist --- you don't even have to be able to balance your own checkbook -- to contemplate just what it would mean to our economy if those ten trillion dollars started flowing back home. Increases in capital investment = more jobs = higher pay = a stronger US economy.
The FairTax was born because one Houston businessman got sick and tired of spending so much time in board meetings worrying about the tax consequences of business decisions. Can you think back over the past few years? Undoubtedly you, too, have made personal and business decisions based on tax consequences. You can't even make a simple decision such as how to save and invest for your own retirement without considering the tax consequences. Your concern should be about your retirement -- not your taxes. That would be your reality with the FairTax.
With the FairTax, American businesses would be free to make decisions based solely on what would benefit the business, its employees, shareholders and customers the most --- not on how it would affect the business tax picture. The only logical result from such a system would be enhanced growth, healthier businesses with stronger bottom lines, and a stronger economy. With the passage of the FairTax, America would become the world's number one tax haven. Every board of directors of every major corporation in the world would be considering whether or not to locate their next plant or facility in the United States so as to take advantage of a system where there is no tax component to capital and labor. Tell me, why would Daimler Chrysler want to continue to make Mercedes automobiles in Germany if they could do so in American with no taxes on capital and labor?
To what extent could the FairTax enhance economic growth in the United States? Some leading economists have suggested that with the FairTax economic growth could as much as double over the next 10 to 15 years. Savings and investment might increase as much as 70% or more during the first year! Among other things, this would mean the elimination of our budget deficit and our current Social Security and Medicare crunch. The FairTax would buy us all the time we would reasonably need to seek orderly and comprehensive solutions to these two safety net programs.
People have asked Congressman Linder and myself if there are any Americans who would not benefit from the passage of the FairTax. You bet there are. I've already mentioned them. Politicians and K-Street lobbyists. These lobbyists are going to be fighting like hell to make sure this plan doesn't grow any legs inside the Beltway. You have to fight just as hard to make sure it does.
Detractors are focusing their attacks on the FairTax on several different fronts. Some are hammering the "progressive" issue. They're playing on the wealth envy of the American people by telling you that the rich just won't be paying their "fair share." The purpose of a tax system is to raise money for the necessary operations of government, not to punish people for daring to achieve. Again, the FairTax treats every American the same. Isn't that what "equal protection under the law" is about? What about the poor? The FairTax is the only tax reform plan that completely relieves America's poor from the responsibility of paying taxes for the operation of the federal government. Under the FairTax plan the poor don't even have to pay for their own Social Security and Medicare. Sorry, concern for the poor can't be used as an excuse to oppose the FairTax. I know that Karl Marx like the idea of progressive taxation. His dream has failed. It's time to move on to a better one.
Other detractors will tell you that the FairTax can't possibly be revenue neutral, that the rate would have to be as much as 50 OR 60% to fund the government at its current levels. Well ... here's a bit of a factoid for you to digest. Over the past 18 quarters of the US economy, that would be over the past four and one-half years, if we had been operating with the FairTax instead of our current system of personal and business income taxes, federal revenues would have been higher for all but one quarter. So much for the "it would have to be 60%" argument.
Some of the members of the president's tax reform commission have reportedly said that they will not recommend a complete overhaul of our tax code. Instead, they want to wimp out with some incremental changes. The FairTax, some say, is just too bold a proposal to undertake. Are these Americans talking? There are ideas and concepts that are just too bold for American to pursue? America is and always has been a country of bold ideas, a country that does not shirk from bold undertakings. It's sad to hear people who purport to be our leaders talk about a fear of undertaking a bold plan, but there they are."