The FairTax: An Easy Fix To America's Economic Problems
Our current tax code is not only hard to understand, but many people say it's unfair. Some think that the rich don't pay enough, while others think they pay too much. Regardless of one's stance on our current tax code, there is a solution out there that could potentially satisfy everyone.It's called the "
FairTax." It has been a proposal in the U.S. House of Representatives, as H.R. 25, and in the U.S. Senate, as S. 13, for several years now.
The FairTax is a national sales tax and it would get rid of most taxes in the American tax code -- meaning no more Social Security, Medicare, Medicaid, or FITW taken out of workers' paychecks. However, supporters of the Social Security and Medicare/Medicaid programs have no reason to be alarmed because the FairTax doesn't mean the end of those programs.
Furthermore, the FairTax will greatly reduce the size and cost of running the IRS -- if not abolish the IRS altogether. There will be no need for auditors, or filing yearly tax returns. April will be just another month on the calendar.
Consider the following facts about the FairTax and the American tax code:
1. The FairTax, being a national sales tax, would logically be the only fair system.
First, none of the money a person earns for their work would be taken from them involuntarily. If a person spends money, they will pay taxes. Furthermore, if people think rich people should pay more, most of them will under this system, unless they are extremely frugal with their money and live well beneath their means.
For example, let's assume the FairTax rate would be 10 percent for ease of math purposes. If a wealthy individual buys a Bentley for a $100,000 and a low-income individual buys a cheap, used car for $2,500, the tax on the Bentley would be $10,000 while the tax on the used car would be $250. And that's just one purchase. Think about all the high-dollar items rich professional athletes and entertainers flaunt. That's a lot of tax revenue!
2. According to the Tax Foundation, a nonprofit organization who researches tax policies around the globe, the United States has the highest corporate income tax in the developed world.
Right now, it is at 39.1 percent. The FairTax would get rid of the Corporate Income Tax, consequently bringing more business and jobs back to the United States. The positive effects of such a change are tremendous. More people with jobs means less people on government subsidy and more people buying things, which in turn means more tax revenue.
3. Even those receiving government subsidies would pay into the system.
Whether you think welfare is a good idea or a bad one, most of us could agree that it is abused by some. However, even those who abuse the system will at least pay back into it with the purchases they make.
The FairTax was originally proposed by former Republican congressman John Linder of Georgia and marketed by conservative talk radio host Neal Boortz. That may be part of the reason why it has had trouble getting any momentum. Neal Boortz is seen as inflammatory and far right by many critics. Another contributor to this legislation not getting passed is that many people don't know about it and quite frankly have no idea that alternatives to the current tax code exist.