Promote The FairTax Now!

Here are two ways you can help to get HR25, the FairTax Act, passed.

First, you can encourage the Republicans to rebuild the party around the FairTax by going here:

Tell Republicans To Rebuild Their Party Around The FairTax
RebuildTheParty.com

You can also ask the incoming administration to endorse the FairTax by going here:

Let Everyone Know The FairTax Is The Bold New Idea This Country Needs
White House 2

In The Federalist #21, Alexander Hamilton argued for the Federal Government to have the power to levy taxes.

To the People of the State of New York: HAVING in the three last numbers taken a summary review of the principal circumstances and events which have depicted the genius and fate of other confederate governments, I shall now proceed in the enumeration of the most important of those defects which have hitherto disappointed our hopes from the system established among ourselves. To form a safe and satisfactory judgment of the proper remedy, it is absolutely necessary that we should be well acquainted with the extent and malignity of the disease. . . . There is no method of steering clear of this inconvenience, but by authorizing the national government to raise its own revenues in its own way. Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. If inequalities should arise in some States from duties on particular objects, these will, in all probability, be counterbalanced by proportional inequalities in other States, from the duties on other objects. In the course of time and things, an equilibrium, as far as it is attainable in so complicated a subject, will be established everywhere. Or, if inequalities should still exist, they would neither be so great in their degree, so uniform in their operation, nor so odious in their appearance, as those which would necessarily spring from quotas, upon any scale that can possibly be devised. It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue.

But, neither Mr. Hamilton nor any of the Founding Fathers ever imagined the beast that would be created a little more than a century later.

Origins of the Income Tax The federal income tax was established in 1913. It actually required an amendment to the United States Constitution to make it legal. Why? Our Founding Fathers believed that taxing individuals on their private income was economic folly. They were right. The absence of an income tax, a tax on productivity, allowed our economy to grow and individuals to prosper for 124 years. The original income tax legislation affected only individuals earning $4,000 or more per year, at a time when the overwhelming majority of Americans earned far less. The 16th Amendment was eventually ratified and added to the Constitution, and a national income tax was born. That 16th Amendment was simply worded, the tax return consisted of only one page, and the entire tax code itself consisted of only 14 pages. No one could have imagined the vast impact it would have on the lives of their children, grandchildren, and future generations of Americans. Since then, the federal income tax system has become so complex that it requires tens of millions of Americans to seek professional help to comply with it, not to mention the enormous, expensive federal bureaucracy required to enforce and administer the tax. The Internal Revenue Service employs more investigative agents than the FBI and the CIA combined, and with 144,000 employees, employs more people than all but the 36 largest corporations in the United States. In addition to the $10 billion needed to operate the IRS, at least $265 billion (that is $900 for every man, woman, and child in this country) must be added to account for the cost of complying with the tax code. Massive amounts of our national wealth are consumed merely by measuring, tracking, sheltering, documenting, and filing our annual income.

There have been many efforts at tax reform over the past twenty years, but all of them failed to produce the desired results. Here are three end-goals that any tax reform plan must have in order to be viable:

1) The plan must remove from the IRS any power to intrude on the private lives of American citizens.
2) The plan must remove from the K Street lobbyists any power to influence Congressional votes.
3) The plan must not allow hidden taxes to be passed along to the consumer at any time.

There is only one tax reform plan that addresses all three of these end-goals:

What is the FairTax plan? The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion legislation, the repeal of the 16th Amendment. This nonpartisan legislation (HR 25/S 1025) abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax -- administered primarily by existing state sales tax authorities. The IRS is disbanded and defunded. The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system. Americans take home their whole paychecks. Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks. The prebate makes the FairTax progressive. To ensure no American pays tax on necessities, the FairTax Plan provides a prepaid, monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax? No tax on used goods. The amount you pay to fund the government is totally visible. With the FairTax you are only taxed once on any good or service. If you choose to buy used goods − used car, used home, used appliances − you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. The FairTax is charged just as state sales taxes are today. When you decide what to buy and how much to spend, you see exactly how much you are contributing to the government with each purchase. Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least afford to pay. Did you know that income taxes and the cost of complying with them currently make up 20 percent or more of all retail prices? It’s true. According to Dr. Dale Jorgenson of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices for everything you buy. If competition does not allow prices to rise, corporations lower labor costs, again hurting those who can least afford to lose their jobs. Finally, if prices are as high as competition allows and labor costs are as low as practical, profits/dividends to shareholders are driven down, thereby hurting retirement savings for moms-and-pops and pension funds invested in Corporate America. With the FairTax, the sham of corporate taxation ends, competition drives prices down, more people in America have jobs, and retirement/pension funds see improved performance. The income tax exports our jobs, rather than our products. The FairTax brings jobs home. Most importantly, the FairTax does not burden U.S. exports the way the current income tax system does. The FairTax removes the cost of corporate taxes and compliance costs from the cost of U.S. exports, putting U.S. exports on a level playing field with foreign competitors. Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S. manufacturing sectors. At home, imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries’ value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match. The FairTax strategy is revenue neutrality: Neither raise nor lower taxes so consumer costs remain stable. The FairTax pays for all current government operations, including Social Security and Medicare. Government revenues are more stable and predictable than with the federal income tax because consumption is a more constant revenue base than is income. If you were in a 23-percent income tax bracket, the federal government would take $23 out of your paycheck for every $100 you made. With the FairTax, if the federal government gets $23 out of every $100 spent in America, the same total revenue is delivered to the federal government. This is revenue neutrality. So, instead of paycheck-earning Americans paying 7.65 percent of their paychecks in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 25.65 percent, consumers in America pay only $23 out of every $100. Or about 30 percent at the cash register when they elect to spend on new goods or services for their own personal consumption. And this tax is collected only on spending above the federal poverty level, providing important progressivity. Tax criminals don’t make criminals out of honest taxpayers. Today, the IRS will admit to 16 percent noncompliance with the code. FairTax.org will be generous and simply take the position that this is likely a conservative estimate of the underground economy. However, this does not take into account the criminal/drug/porn economy, which equally conservative estimates put at one trillion dollars of untaxed activity. The FairTax does tax this -- criminals love to flash that cash at retail -- while continuing to provide the federal penalties so effective in bringing such miscreants to justice. The substantial decrease in points of compliance -- from every wage earner, investor, and retiree, down to only retailers -- also allows enforcement to concentrate on following the money to criminal activity, rather than making potential criminals out of every taxpayer struggling to decipher the current code.

Can you decipher the current code? Find out! The following link goes to the Table of Contents of our current tax code (26 USC). Not the full code, just the Table of Contents:

Internal Revenue Code (26 USC) (Warning! If you are on a 56k modem, it would not be a good idea to click this link unless you plan on waiting a while just to view this Table of Contents!)

That's some list, is it not? 9,833 sections long! You could read the novel War And Peace by Leo Tolstoy before getting through 26 USC.

So, what should we do about it? There really is only one answer. Scrap the entire system and rebuild it from the ground up. I support the FairTax to replace our current tax system. You can get additional information, including research papers prepared by economists from the nation's leading colleges and universities, by visiting the following website:

Americans For Fair Taxation

Some FairTax Food For Thought

We all know what income tax is as most of us actually pay it. We also know the headaches it causes and how easily the IRS can abuse it's power when investigating and auditing private citizens. But where did this monstrosity come from?

In The Federalist #21, Alexander Hamilton argued for the Federal Government to have the power to levy taxes.

To the People of the State of New York: HAVING in the three last numbers taken a summary review of the principal circumstances and events which have depicted the genius and fate of other confederate governments, I shall now proceed in the enumeration of the most important of those defects which have hitherto disappointed our hopes from the system established among ourselves. To form a safe and satisfactory judgment of the proper remedy, it is absolutely necessary that we should be well acquainted with the extent and malignity of the disease. . . . There is no method of steering clear of this inconvenience, but by authorizing the national government to raise its own revenues in its own way. Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. If inequalities should arise in some States from duties on particular objects, these will, in all probability, be counterbalanced by proportional inequalities in other States, from the duties on other objects. In the course of time and things, an equilibrium, as far as it is attainable in so complicated a subject, will be established everywhere. Or, if inequalities should still exist, they would neither be so great in their degree, so uniform in their operation, nor so odious in their appearance, as those which would necessarily spring from quotas, upon any scale that can possibly be devised. It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue.

But, neither Mr. Hamilton nor any of the Founding Fathers ever imagined the beast that would be created a little more than a century later.

Origins of the Income Tax The federal income tax was established in 1913. It actually required an amendment to the United States Constitution to make it legal. Why? Our Founding Fathers believed that taxing individuals on their private income was economic folly. They were right. The absence of an income tax, a tax on productivity, allowed our economy to grow and individuals to prosper for 124 years. The original income tax legislation affected only individuals earning $4,000 or more per year, at a time when the overwhelming majority of Americans earned far less. The 16th Amendment was eventually ratified and added to the Constitution, and a national income tax was born. That 16th Amendment was simply worded, the tax return consisted of only one page, and the entire tax code itself consisted of only 14 pages. No one could have imagined the vast impact it would have on the lives of their children, grandchildren, and future generations of Americans. Since then, the federal income tax system has become so complex that it requires tens of millions of Americans to seek professional help to comply with it, not to mention the enormous, expensive federal bureaucracy required to enforce and administer the tax. The Internal Revenue Service employs more investigative agents than the FBI and the CIA combined, and with 144,000 employees, employs more people than all but the 36 largest corporations in the United States. In addition to the $10 billion needed to operate the IRS, at least $265 billion (that is $900 for every man, woman, and child in this country) must be added to account for the cost of complying with the tax code. Massive amounts of our national wealth are consumed merely by measuring, tracking, sheltering, documenting, and filing our annual income.

There have been many efforts at tax reform over the past twenty years, but all of them failed to produce the desired results. Here are three end-goals that any tax reform plan must have in order to be viable:

1) The plan must remove from the IRS any power to intrude on the private lives of American citizens.
2) The plan must remove from the K Street lobbyists any power to influence Congressional votes.
3) The plan must not allow hidden taxes to be passed along to the consumer at any time.

There is only one tax reform plan that addresses all three of these end-goals:

THE FAIR TAX

What is the FairTax plan? The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion legislation, the repeal of the 16th Amendment. This nonpartisan legislation (HR 25/S 1025) abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax -- administered primarily by existing state sales tax authorities. The IRS is disbanded and defunded. The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system. Americans take home their whole paychecks. Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks. The prebate makes the FairTax progressive. To ensure no American pays tax on necessities, the FairTax Plan provides a prepaid, monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax? No tax on used goods. The amount you pay to fund the government is totally visible. With the FairTax you are only taxed once on any good or service. If you choose to buy used goods − used car, used home, used appliances − you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. The FairTax is charged just as state sales taxes are today. When you decide what to buy and how much to spend, you see exactly how much you are contributing to the government with each purchase. Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least afford to pay. Did you know that income taxes and the cost of complying with them currently make up 20 percent or more of all retail prices? It’s true. According to Dr. Dale Jorgenson of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices for everything you buy. If competition does not allow prices to rise, corporations lower labor costs, again hurting those who can least afford to lose their jobs. Finally, if prices are as high as competition allows and labor costs are as low as practical, profits/dividends to shareholders are driven down, thereby hurting retirement savings for moms-and-pops and pension funds invested in Corporate America. With the FairTax, the sham of corporate taxation ends, competition drives prices down, more people in America have jobs, and retirement/pension funds see improved performance. The income tax exports our jobs, rather than our products. The FairTax brings jobs home. Most importantly, the FairTax does not burden U.S. exports the way the current income tax system does. The FairTax removes the cost of corporate taxes and compliance costs from the cost of U.S. exports, putting U.S. exports on a level playing field with foreign competitors. Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S. manufacturing sectors. At home, imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries’ value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match. The FairTax strategy is revenue neutrality: Neither raise nor lower taxes so consumer costs remain stable. The FairTax pays for all current government operations, including Social Security and Medicare. Government revenues are more stable and predictable than with the federal income tax because consumption is a more constant revenue base than is income. If you were in a 23-percent income tax bracket, the federal government would take $23 out of your paycheck for every $100 you made. With the FairTax, if the federal government gets $23 out of every $100 spent in America, the same total revenue is delivered to the federal government. This is revenue neutrality. So, instead of paycheck-earning Americans paying 7.65 percent of their paychecks in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 25.65 percent, consumers in America pay only $23 out of every $100. Or about 30 percent at the cash register when they elect to spend on new goods or services for their own personal consumption. And this tax is collected only on spending above the federal poverty level, providing important progressivity. Tax criminals don’t make criminals out of honest taxpayers. Today, the IRS will admit to 16 percent noncompliance with the code. FairTax.org will be generous and simply take the position that this is likely a conservative estimate of the underground economy. However, this does not take into account the criminal/drug/porn economy, which equally conservative estimates put at one trillion dollars of untaxed activity. The FairTax does tax this -- criminals love to flash that cash at retail -- while continuing to provide the federal penalties so effective in bringing such miscreants to justice. The substantial decrease in points of compliance -- from every wage earner, investor, and retiree, down to only retailers -- also allows enforcement to concentrate on following the money to criminal activity, rather than making potential criminals out of every taxpayer struggling to decipher the current code.

Can you decipher the current code? Find out! The following link goes to the Table of Contents of our current tax code (26 USC). Not the full code, just the Table of Contents:

Internal Revenue Code (26 USC) (Warning! If you are on a 56k modem, it would not be a good idea to click this link unless you plan on waiting a while just to view this Table of Contents!)

That's some list, is it not? 9,833 sections long! You could read the novel War And Peace by Leo Tolstoy before getting through 26 USC.

So, what should we do about it? There really is only one answer. Scrap the entire system and rebuild it from the ground up. I support the FairTax to replace our current tax system. You can get additional information, including research papers prepared by economists from the nation's leading colleges and universities, by visiting the following website:

Americans For Fair Taxation

What Would Reagan Say? Let Them Go Their Own Way!

Some kind soul unearthed this speech given by Ronald Reagan at the Conservative Political Action Convention on March 1, 1975. It still applies today.

The future President said:

Since our last meeting we have been through a disastrous election. It is easy for us to be discouraged, as pundits hail that election as a repudiation of our philosophy and even as a mandate of some kind or other. But the significance of the election was not registered by those who voted, but by those who stayed home. If there was anything like a mandate it will be found among almost two-thirds of the citizens who refused to participate. Bitter as it is to accept the results of the November election, we should have reason for some optimism. For many years now we have preached "the gospel," in opposition to the philosophy of so-called liberalism which was, in truth, a call to collectivism. Now, it is possible we have been persuasive to a greater degree than we had ever realized. Few, if any, Democratic party candidates in the last election ran as liberals. Listening to them I had the eerie feeling we were hearing reruns of Goldwater speeches. I even thought I heard a few of my own. Bureaucracy was assailed and fiscal responsibility hailed. Even George McGovern donned sackcloth and ashes and did penance for the good people of South Dakota. But let’s not be so naive as to think we are witnessing a mass conversion to the principles of conservatism. Once sworn into office, the victors reverted to type. In their view, apparently, the ends justified the means. The "Young Turks" had campaigned against "evil politicians." They turned against committee chairmen of their own party, displaying a taste and talent as cutthroat power politicians quite in contrast to their campaign rhetoric and idealism. Still, we must not forget that they molded their campaigning to fit what even they recognized was the mood of the majority. And we must see to it that the people are reminded of this as they now pursue their ideological goals -- and pursue them they will. I know you are aware of the national polls which show that a greater (and increasing) number of Americans -- Republicans, Democrats and independents -- classify themselves as "conservatives" than ever before. And a poll of rank-and-file union members reveals dissatisfaction with the amount of power their own leaders have assumed, and a resentment of their use of that power for partisan politics. Would it shock you to know that in that poll 68 percent of rank-and-file union members of this country came out endorsing right-to-work legislation? These polls give cause for some optimism, but at the same time reveal a confusion that exists and the need for a continued effort to "spread the word."

That is what we need to do. The incoming Obama Administration and the Democrat-controlled Congress are most certainly going to trip up on their own promises and agendas. When (not if but when) that happens, we need to be ready with our message, a message that go right back to our Conservative roots.

More:

Americans are hungry to feel once again a sense of mission and greatness. I don 't know about you, but I am impatient with those Republicans who after the last election rushed into print saying, "We must broaden the base of our party" -- when what they meant was to fuzz up and blur even more the differences between ourselves and our opponents. It was a feeling that there was not a sufficient difference now between the parties that kept a majority of the voters away from the polls. When have we ever advocated a closed-door policy? Who has ever been barred from participating? Our people look for a cause to believe in. Is it a third party we need, or is it a new and revitalized second party, raising a banner of no pale pastels, but bold colors which make it unmistakably clear where we stand on all of the issues troubling the people? Let us show that we stand for fiscal integrity and sound money and above all for an end to deficit spending, with ultimate retirement of the national debt. Let us also include a permanent limit on the percentage of the people's earnings government can take without their consent. Let our banner proclaim a genuine tax reform that will begin by simplifying the income tax so that workers can compute their obligation without having to employ legal help. And let it provide indexing -- adjusting the brackets to the cost of living -- so that an increase in salary merely to keep pace with inflation does not move the taxpayer into a surtax bracket. Failure to provide this means an increase in government's share and would make the worker worse off than he was before he got the raise. Let our banner proclaim our belief in a free market as the greatest provider for the people. Let us also call for an end to the nit-picking, the harassment and over-regulation of business and industry which restricts expansion and our ability to compete in world markets. Let us explore ways to ward off socialism, not by increasing government’s coercive power, but by increasing participation by the people in the ownership of our industrial machine. Our banner must recognize the responsibility of government to protect the law-abiding, holding those who commit misdeeds personally accountable. And we must make it plain to international adventurers that our love of peace stops short of "peace at any price." We will maintain whatever level of strength is necessary to preserve our free way of life. A political party cannot be all things to all people. It must represent certain fundamental beliefs which must not be compromised to political expediency, or simply to swell its numbers. I do not believe I have proposed anything that is contrary to what has been considered Republican principle. It is at the same time the very basis of conservatism. It is time to reassert that principle and raise it to full view. And if there are those who cannot subscribe to these principles, then let them go their way.

President Reagan had it exactly right back in 1975. His words are still relevant to us today.

You can access the complete speech on-line here:

Let Them Go Their Own Way
Ronald Reagan
CPAC
March 1, 1975