A couple months back, Neal Boortz and Congressman John Linder launched the Fair Tax Book. More than six hundred thousand taxpayers have already signed on in support of the plan. Unfortunately, little was made of it in the mainstream media. Sure, Fox picked up the story and Hannity did quite a bit of promo with Boortz, but why are people not talking about it?
Below is a sampling of questions people have about the Fair Tax:
What really is the Fair Tax?
The FairTax is a non-partisan proposal (HR 25/S 1493) that abolishes all federal income taxes, including personal, estate, gift, capital gains, alternative minimum, corporate, Social Security, other payroll, and self-employment taxes, and replaces them all with one simple, visible, federal retail sales tax. The FairTax dramatically changes the basis for taxation by eliminating the root of the problem: Taxing income. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. The FairTax is a fair, efficient, and intelligent solution to the frustration and inequity of our current tax system.
What Taxes are abolished?
The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.
Is the 23% FairTax higher or lower when compared to the income taxes people pay today?
Most people are paying that much or more today – much of it is just hidden from view. The income tax bracket most people fall into is 15 percent, and all wage earners pay 7.65 percent in payroll taxes. That’s 23 percent right there, without taking into account the 7.65 percent employer matching! On top of that, you have to add in all of the hidden taxes embedded in the price of everything you buy, from goods (averaging 22 percent) to services (averaging 25 percent).
Effective tax rates vs. stated tax rates
Because the 23-percent FairTax would not be imposed on necessities, an individual spending $28,808 would pay an effective tax rate of only 15.6 percent, not 23 percent. That same individual will pay 17.3 percent of his or her income to federal taxes under current law.
How does the FairTax protect low-income and lower middle-income families and individuals?
Under the FairTax plan, poor people pay no net FairTax at all up to the poverty level! Every household receives a rebate that is equal to the FairTax paid on essential goods and services, and wage earners are no longer subject to the most regressive and burdensome tax of all, the payroll tax. Those spending at twice the poverty level will pay a tax of only 11.5 percent – a rate much lower than the income and payroll tax burden they bear today.
Under the federal income tax, slow economic growth and recessions have a disproportionately adverse impact on lower income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides. The FairTax dramatically improves economic growth and wage rates. Retaining the present tax system makes economic progress needlessly slow, thus harming low-income people the most.
In contrast, the FairTax dramatically improves economic growth and wage rates for all, but especially for lower income families and individuals. In addition to receiving the monthly FairTax rebate, these taxpayers are freed from regressive payroll taxes, the federal income tax, and the compliance burdens associated with each. They pay no more hidden taxes on goods (averaging 22 percent) or services (averaging 25 percent), and used goods are tax-free.
Closing:
With 45 Co-Sponsors in the House, and 134 House members either “For” or “Leaning For” the measure, you would think this would be getting more traction and play. This measure is worth a deeper dive. This measure deserves some PR from the blogosphere.
Check out the whole concept at www.fairtax.org
Cross posted from Today’s Democracy