latest FairTax news release - out today
Replacing Income Tax Code With FairTax, the Progressive National Retail Sales Tax, Deserves a Thorough Look, Says Group
11/9/2004 4:53:00 PM
To: National Desk, Political Reporter
Contact: Tom Wright or Genie Hayes, 800-FAIRTAX ext. 137, both of FairTax.org
HOUSTON, Nov. 9 /U.S. Newswire/ -- Now that the election is over and the President has stated that his platform will include the ambitious and worthy goal of simplifying the tax code; the FairTax -- the national retail sales tax -- deserves a thorough look.
The 2004 elections provided a contentious breeding ground for partisan distortions of various issues, including the FairTax. The FairTax (HR 25/ S 1493) is actually quite different from traditional state sales taxes. This point was missed by many in the partisan atmosphere of the elections. Now as Paul Harvey says "It's time for the rest of the story."
"The FairTax offers an ideal vehicle for resolving the partisan divide which exists in our country after a long and often times brutal election" stated Tom Wright, executive director of FairTax.org. "Our non-partisan organization is made up of over 550,000 supporters of every possible political affiliation, educational, and economic background. At our grassroots level, union rank-and-file march side-by-side our most Libertarian supporters. We are a non partisan effort."
"The first feature to cover in this vein is the FairTax's progressivity," continued Wright. "Only those spending more than $250,000 a year pay the highest rate, with no American paying any of the federal sales tax below and up to the poverty level."
Here are a few of the many reasons why Democrats, Republicans, and every other party should embrace our full tax replacement alternative as a progressive and equitable means of solving many of the current inefficiencies and abuses of the income tax system, as well as providing a much needed stimulus to our economy.
1. The FairTax ends federal paycheck deductions of all kinds; the working man or woman gets a full paycheck.
The plan is a total replacement for all income and Social Security taxes: Personal, gift, estate, capital gains, alternative minimum, earned income tax credit, Social Security, Medicare, self-employment, and corporate taxes. As you know, Social Security taxes are the most regressive element of our current system.
2. The FairTax plan is revenue neutral; it neither raises nor lowers taxes.
The rate is set to raise the same revenue the replaced taxes raise today. For many taxpayers, that means no overall loss or gain. As an organization, we wish to remove ourselves from battles over tax hikes or cuts, special interests, winners and losers. While the FairTax makes federal taxes very, very obvious (and easy for taxpayers to control themselves), there is no intention to give large groups any break over what they are paying now, nor to burden another group.
3. The FairTax is a progressive tax.
Only the biggest spenders pay the maximum rate; those at or below the poverty level pay an honest and transparent nothing. No one living at or under the poverty level, according to guidelines set by the Department of Health & Human Services, pay any federal tax (hidden or obvious) on any of their spending. Today our working poor are burdened with the most regressive tax of all, Social Security, which they pay with every paycheck their entire working lives. The FairTax ends that. Those same people are targeted by unscrupulous tax preparers and the IRS due to the complexity of the earned income tax credit. According to Dale Jorgenson, Harvard economics professor, people on fixed income (and every other consumer in America) pay an average of 22 percent in hidden corporate taxes and compliance costs with every good they buy. Hidden taxes on services average 25 percent. The FairTax ends this. Competition forces the prices on goods and services to come down once the providers of these goods and services find that they can produce them at lower cost. The FairTax does not tax used goods. And finally, a rebate zeros the tax up to the poverty level.
4. The FairTax encourages American manufacturing.
By removing the embedded cost of the income tax system, American-made goods are more affordable at home and more competitive overseas. This brings good jobs back to our shores, as well as keeping those we have, here. In addition, the FairTax is levied on imports sold in this country. The preference that our current system provides to foreign producers in both our own market, as well as foreign, ends. This has enormous implications with respect to our trade deficit.
5. Taxpayers decide how much tax they pay above the poverty level.
The wealthy are finally taxed according to their lifestyle, which the income tax has miserably failed to do since its inception; those who choose to live modestly pay less (both as a percentage of spending and overall taxes paid). And the FairTax successfully taxes accumulated wealth, which the estate tax usually fails to do.
6. The FairTax does not tax education or training thereby promoting upward mobility.
Estimates are that a college education is as much as 50- percent less expensive under the FairTax compared to today. Why? College costs are paid for with pre-tax dollars as opposed to post-tax dollars. There is no tax whatsoever on any education expenses; prices on education items drop on average 22 percent. In addition since there are no penalties on savings or investment under the FairTax and workers keep their full paycheck, the opportunity to save for a college education or work training is significantly enhanced.
7. The FairTax triggers a very significant economic expansion.
Dr. Dale Jorgenson, former chairman of Harvard University's economics department, forecast 10.5 percent GDP growth in the first year after enactment, with decreases each year thereafter, but leveling off at a rate that is slightly higher than under a continuation of the current system. That leveling off occurs after the economy has increased to between 1/4 and 1/3 larger than under a continuation of the current system. This has enormous implications for the federal budget deficit and the job picture, among others.
"FairTax.org has spent more than $22 million over the past decade researching both the marketing and economic aspects of implementing the FairTax," stated Wright. "However, this season's partisan debate reflected very little use of this wealth of material or understanding of the concept. We look forward to changing that in the same non-partisan manner with which we have brought the FairTax so far. And we look forward to people researching and understanding our legislation as written, rather than apparent analogs."