Missouri House Approves State Fair Tax Constitutional Amendment

I've been a proponent of the FairTax for a few years now. My faith in the FairTax has never waivered nor will it anytime soon. Although many on the left (and a few on the right) have worked to discredit the idea of the FairTax over the past few years, the movement is gaining momentum.

The lastest victory come from Missouri where the House of Representatives voted to approve of a state Constitutional Amendment that would give Missouri a state-level FairTax.

From Fair Tax Nation:

In a development of potential national significance, the Missouri House of Representatives, on April 16, 2009, sent a proposed amendment to the Missouri Constitution, HJR36, to the state Senate that, if enacted, would bring a state-level Fair Tax to Missouri. The sponsor of the bill, Edgar G. Emery (R-Missouri District 126, Lamar), advised me yesterday he thinks the bill has a reasonable chance of passage in the state Senate. There is no definite time table yet there - the resolution has had its first reading. However the passage of the proposal in the state House has enhanced the profile of the bill in the state Senate. If the state Senate approves, the measure will be submitted to the voters of the State in November 2010 without need for consideration by the Governor. If approved by the voters, the measure would take effect on January 1, 2012, and Missouri would become the first laboratory in the United States - and perhaps the world - to test the macro-economic benefits of the Fair Tax. New Jersey FairTax State Co-Director, engineer and business owner, Norm Simms, has stated frequently that his decisions on where to site production are sensitive to tax climate. If the state FairTax passes, businesses would be expected to seriously consider locating - or relocating - to Missouri. Credit for the success of this bill goes to the Missouri FairTax volunteeers.

You can access Missouri HJR36 on-line here:

Missouri HJR36

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


Americans For Fair Taxation

Even the IRS Can See The Double Standard On Enforcement Of The Tax Code

Fiscal responsibility is one reason why we should be supporting all of the Tea Parites being held today. But personal responsibility isn't very far down the list of reasons to do so.

Tom Hamburger and Ralph Vartabedian of the Chicago Tribune have this to say:

The Treasury secretary, who oversees the IRS, didn't pay all his taxes. Neither did five other top nominees for the Obama administration, or their spouses. Now, as Wednesday's tax deadline looms, some Americans are wondering why they should comply with the arcane requirements of the Internal Revenue Service when top administration officials failed to do the same. Even some IRS employees are upset at what they see as a double standard. ... "Our members are upset and angry," said Colleen Kelley, president of the National Treasury Employees Union, referring to concern bubbling up within the IRS over unusually strict rules that can cost agents their jobs if they make a mistake. In some cases, IRS employees have lost jobs for simply filing a late return or failing to report a few hundred dollars of interest income.

And yet, people like Timothy Geithner got rubberstamped right through the Senate. Do you believe you would get such gentle treatment if you failed to pay your taxes the way Geithner failed to do so?

Probably not:

Robert Schriebman, a California tax lawyer who has testified before Congress, said his clients are seething over the tough treatment they get from the IRS, while some in the president's Cabinet apparently were able to duck paying their taxes. "Politically powerful people are less likely to get bothered by the IRS," Schriebman said. "It is more than a question of fairness. Not only is the IRS looking away from confronting influential people, the IRS is getting a lot tougher and nastier toward the little guy."

Which is one of several reasons why we need to scrap the current tax code and replace it with the Fair Tax as well as getting rid of the IRS altogether.

You can access the complete article on-line here:

IRS Workers See Double Standard On Tax Errors
Tom Hamburger and Ralph Vartabedian
Tribune Newspapers
April 15, 2009

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

The Definition Of Fair And A Letter Of Support For The FairTax

The Editorial Staff at the Augusta Chronicle put out a pretty good essay about the FairTax last month. They basically said that just because the Democrats won both houses of Congress and the White House doesn't mean that the FairTax is dead. Nope, in fact, far from it.

The idea is as viable as ever and the cause is growing. Here is some of what they said:

A proposed 23-cent national sales tax, the Fair Tax would replace the current federal system of taxation -- meaning no income tax and no Social Security tax. That means power to the people, because, first of all, they get their entire paycheck. Secondly, they determine the amount of tax they pay by the decisions they make on their purchases. The Fair Tax also contains a feature called a "prebate" -- money that would wipe out federal taxes completely for those at or below the poverty line. Ironically, even as Democrats who have not quite warmed up to the idea are set to take control of both Congress and the White House, a new benefit of the Fair Tax has arrived: If taxpayers received more of their paycheck in take-home pay, they would be more equipped to make their mortgage payments. So perhaps fewer Americans would be losing their homes to foreclosure.

Barack Obama has already admitted that he is not the Messiah and that the economy is going to get worse before it gets better. I am absolutely certain it will get worse because history has shown us that socialist tax increases coupled with government deficit spending merely prolongs our economic plight. Thus, as the economy worsens over the next four years due to Democrat meddling, I believe people will want real reform in D.C. The FairTax can deliver that.

More:

And just imagine how much more luminous and fragrant the spring would be if you didn't have wrestle the IRS every April! And guess what that wrestling match costs Americans every year: $265 billion in tax preparation costs. That alone is cause for dumping tea in Boston Harbor. It's too bad that some have demagogued the Fair Tax, especially at election time. It's not a tax increase; it's tax reform of the best kind, because it shifts power from Washington to the people. The Fair Tax is so-called because it brings the underground economy into the light, and closes the many loopholes the powerful exploit to avoid taxation. Moreover, experts predict it will prompt offshore assets to flow back to the United States. Why? Because they would no longer need to hide from the long nose of the IRS. Philosophically it's a winner, too, because it shifts taxation from industriousness and production to consumption. Such a reward of hard work and investment would be just the thing a struggling economy such as ours could really use.

Absolutely.

You can access the complete editorial on-line here:

The Definition Of Fair
Editorial Staff
Augusta Chronicle
November 16, 2008

An Open Letter To The President, Congress And The American People

And who supports the FairTax? Hundered of Economists and Professors from our nation's most prestigious institutions. Check out who signed the above letter:

Donald L. Alexander
Professor of Economics
Western Michigan University

John Greenhut, Ph.D.
Associate Professor
Finance & Business Economics
School of Global Management and Leadership
Arizona State University

Ben Pierce
Central Missouri State University

Wayne Angell
Angell Economics

Darrin V. Gulla
Dept. of Economics
University of Georgia

Michael K. Pippenger, Ph.D.
Associate Professor of Economics
University of Alaska

Jim Araji
Professor of Agricultural Economics
University of Idaho

Jon Halvorson
Assistant Professor of Economics
Indiana University of Pennsylvania

Robert Piron
Professor of Economics
Oberlin College

Ray Ball
Graduate School of Business
University of Chicago

Reza G. Hamzaee, Ph.D.
Professor of Economics &
Applied Decision Sciences
Department of Economics
Missouri Western State College

Mattias Polborn
Department of Economics
University of Illinois

Roger J. Beck
Professor Emeritus
Southern Illinois University, Carbondale

James M. Hvidding
Professor of Economics
Kutztown University

Joseph S. Pomykala, Ph.D.
Department of Economics
Towson University

John J. Bethune
Kennedy Chair of Free Enterprise
Barton College

F. Jerry Ingram, Ph.D.
Professor of Economics and Finance
The University of Louisiana-Monroe

Barry Popkin
University of North Carolina
at Chapel Hill

David M. Brasington
Louisiana State University

Drew Johnson
Fellow
Davenport Institute for Public Policy
Pepperdine University

Steven W. Rick
Lecturer, University of Wisconsin
Senior Economist, Credit Union National Association

Jack A. Chambless
Professor of Economics
Valencia College

Steven J. Jordan
Visiting Assistant Professor
Virginia Tech
Department of Economics

Paul H. Rubin
Samuel Candler Dobbs
Professor of Economics & Law
Department of Economics
Emory University

Christopher K. Coombs
Louisiana State University

Richard E. Just
University of Maryland

John Ruggiero
University of Dayton

William J. Corcoran, Ph.D.
University of Nebraska at Omaha

Dr. Michael S. Kaylen
Associate Professor
University of Missouri

Michael K. Salemi
Bowman and Gordon Gray
Professor of Economics
University of North Carolina
at Chapel Hill

Eleanor D. Craig
Economics Department
University of Delaware

David L. Kendall
Professor of Economics and Finance
University of Virginia's College at Wise

Dr. Carole E. Scott
Richards College of Business
State University of West Georgia

Susan Dadres, Ph.D.
Department of Economics
Southern Methodist University

Peter M. Kerr
Professor of Economics
Southeast Missouri State University

Carlos Seiglie
Dept. of Economics
Rutgers University

Henry Demmert
Santa Clara University

Miles Spencer Kimball
Professor of Economics
University of Michigan

John Semmens
Economist
Phoenix College
Arizona

Arthur De Vany
Professor Emeritus
Economics and Mathematical Behavioral Sciences
University of California, Irvine

James V. Koch
Department of Economics
Old Dominion University

Alan C. Shapiro
Ivadelle and Theodore Johnson
Professor of Banking and Finance
Marshall School of Business
University of Southern California

Pradeep Dubey
Leading Professor
Center for Game Theory
Dept. of Economics
SUNY at Stony Brook

Laurence J. Kotlikoff
Professor of Economics
Boston University

Dr. Stephen Shmanske
Professor of Economics
California State University,
Hayward

Demissew Diro Ejara
William Paterson University of New Jersey

Edward J. López
Assistant Professor
University of North Texas

James F. Smith
University of North Carolina
at Chapel Hill

Patricia J. Euzent
Department of Economics
University of Central Florida

Franklin Lopez
Tulane University

Vernon L. Smith
Economist

John A. Flanders
Professor of Business and Economics
Central Methodist University

Salvador Lopez
University of West Georgia

W. James Smith
Dean of Liberal Arts and Sciences and Professor of Economics
University of Colorado at Denver

Richard H. Fosberg, Ph.D.
William Paterson University

Yuri N. Maltsev, Ph.D.
Professor of Economics
Carthage College

John C. Soper
Boler School of Business
John Carroll University

Gary L. French, Ph.D.
Senior Vice President
Nathan Associates Inc.

Glenn MacDonald
John M. Olin Distinguished Professor of Economics and Strategy
Washington University in St. Louis

Roger Spencer
Professor of Economics
Trinity University

Professor James Frew
Economics Department
Willamette University

Dr. John Merrifield
Professor of Economics
University of Texas-San Antonio

Daniel A. Sumner, Director,
University of California
Agricultural Issues Center
and the Frank H. Buck, Jr.,
Chair Professor,
Department of Agricultural and Resource Economics,
University of California, Davis

K. K. Fung
University of Memphis

Dr. Matt Metzgar
Mount Union College

Curtis R. Taylor
Professor of Economics and Business
Duke University

Satya J. Gabriel, Ph.D.
Professor of Economics and Finance
Mount Holyoke College

Carlisle Moody
Department of Economics
College of William and Mary Robert Vigil
Analysis Group, Inc.

Dave Garthoff
Summit College
The University of Akron

Andrew P. Morriss
Galen J. Roush Professor of Business Law & Regulation
Case Western Reserve University School of Law

John H. Wicks, Ph.D.
Professor Emeritus
Department of Economics
University of Montana

Ronald D. Gilbert
Associate Professor of Economics
Texas Tech University

Timothy Perri
Department of Economics
Appalachian State University

F. Scott Wilson, Ph.D.
Canisius College

Philip E. Graves
Department of Economics
University of Colorado

Mark J. Perry
School of Management and Department of Economics
University of Michigan-Flint

Mokhlis Y. Zaki
Professor of Economics Emeritus
Northern Michigan University

Bettina Bien Greaves, Retired
Foundation for Economic Education

Timothy Peterson
Assistant Professor
Economics and Management Department
Gustavus Adolphus College

Convert Paulson's Last $350 Billion Into A Tax Holiday

I had always entertained the thought that a President who wanted to drum up support for the FairTax could have easily done so by granting a period of Tax Amnesty (Article II, Section 2 of the United States Constitution) during which no one would have to pay any Federal taxes. It would be a small taste of what effect the FairTax would have on the national economy and when people see how relieving so much economic pressure would allow such a huge economic boom to occur, they would be writing letters to Congress urging the passage of HR 25 and S 1025.

Louie Gohmert has a similar idea except that he is going to try and push it through Congress. Not an easy task since the Democrats control both houses and the idea of not collecting taxes is a concept they seem completely incapable of grasping. But a two-month Tax Holiday would be exactly like having the FairTax for that same time period and it would more than jump-start our economy.

From a November 28, 2008 Press Release:

By instating a temporary tax holiday, we could electrify the American economy and provide overwhelming relief to taxpayers, all for less than the cost of the current failed Paulson-Pelosi bailout system." "We need to give this money to the people who earned it. I am sick of Washington millionaires trying to decide which of their cronies should get the next wad of taxpayer money," Rep. Louie Gohmert continued. "Think about how much you would have if you didn't have any social security or income tax withheld from your pay check, or if you didn't have to pay those taxes for January and February! Americans could take and invest their own money where they believe it should go - to paying down mortgages, buying a new car, making credit card payments. The economy would get relief where it is needed the most. Why try to decide how to prevent foreclosures? Just give taxpayers their own money to catch up on their payments. Those in lower income brackets who are hit the hardest by the FICA tax would see huge money back, and then THEY could choose who should benefit from their hard earned money. Even the self-employed and small business owners would receive a fantastic amount of their own much-needed money, and they will be able to invest that back into their businesses and even create the ability to hire more people.” Gohmert is currently preparing a bill to declare the tax holiday for January and February of 2009 and is also gathering support at the same time. He said, “We can save more home mortgages, increase employment, and boost economic growth for a lower price tag with this plan than with any centralized bureaucratic program, all by giving the power back to the taxpayers. I am demanding that not another penny goes to executive bailouts, but these billions of taxpayer dollars should go to the taxpayers who earned them."

You can support the Tax Holiday by going to the following link and signing the petition:

Sign The Tax Holiday Petition!

You can access the original Press Release on-line here:

Convert Paulson's Last $350 Billion Into Tax Holiday, Says U.S. Congressman
Rep. Louie Gohmert (R-TX)
November 28, 2008

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

Democrats Pass Their Fake 'No Energy' Bill And Rangel's Tax Tangles

It was done under the cover of the night. No committees, no public scrutiny. The Democrats, once again thumbing their collective noses at their own 2006 promise of bipartisanship and transparency, passed H.R. 6899, 236-189. 15 Republicans sided with the Dems and 13 Democrats voted "no."

Instead of increasing our energy supply here at home and bringing down energy prices, here is what the bill does:

· Implements vast restrictions on energy drilling on the Outer Continental Shelf (OCS) compared to what would otherwise be allowed if the current moratorium on OCS energy development were allowed to expire on October 1, 2008. · Provides states no incentive to allow for the expanded OCS drilling. That is, states would not get revenue shares in any of the newly leased areas. · Repeals the moratorium on oil shale on federal lands, but prohibits any actual oil shale leasing unless a state allows it via state law. Allowing the current moratorium to simply expire in two weeks would allow for oil shale leasing on federal lands without state approvals. · Releases 70 million barrels from the Strategic Petroleum Reserve (SPR) and provides for a subsequent replenishment with a less desirable grade of oil. · Authorizes $1.7 billion taxpayer dollars to subsidize public transportation ridership already at record levels. · Includes a requirement, commonly known as the Renewable Portfolio Standard or the Renewable Electricity Standard, that electric suppliers, other than governmental entities and rural electric cooperatives, provide 2.75% of their electricity using renewable energy resources by the year 2010—and increasing incrementally to 15% by the year 2020. · Directs Fannie Mae and Freddie Mac to develop loan products and flexible underwriting guidelines to facilitate a secondary market for energy-efficient and location-efficient mortgages on housing for low and moderate income families—and for second and junior mortgages made for the purposes of energy efficiency or renewable energy improvements. · Mandates gas stations owned by larger oil and gas companies to install at least one alternative fuel pump (natural gas, E-85, biodiesel, or hydrogen) by 2018. · Includes the Charlie Rangel transportation earmark for New York by terminating the remaining portions of the New York Liberty Zone tax incentives program (implemented to encourage business investment in lower Manhattan). · Includes several tax increases—primarily the special carve-out of large (and foreign-government-owned) oil and gas producers from the domestic manufacturing tax deduction, the freeze of this tax deduction for all other oil and gas companies, and a restriction of how foreign oil and gas extraction income is determined for purposes of the foreign income tax credit. The bill also includes a PAYGO gimmick that will force energy companies to remit $3 billion in estimated taxes in FY2013 sooner than they otherwise would have to.

So, we Americans are left with record high energy prices and in addition to that, the Dems have saddled us with even higher taxes which will mean even higher prices as those taxes go into effect and they are passed along to us consumers. Apparently, the leftists are still living in the fantasy world where everyone believes that higher taxes somehow help a sagging economy, rather than the real world knowledge that high taxes will more deeply hurt an already sluggish economy.

Here is what is not in the bill:

· Litigation reform, so that American energy exploration and development, including that authorized by this legislation, is not further halted by environmentalist lawsuits. · Allowing energy exploration and development in the Arctic National Wildlife Refuge (ANWR). · Expedited petroleum refinery permitting. · Expedited nuclear reactor permitting. · There is also no language regarding futures markets speculation.

In short, this bill bows to the extreme left while brushing aside the concern of mainstream Americans.

You can access the roll call vote on-line here:

FINAL VOTE RESULTS FOR ROLL CALL 599

House of Representatives
September 16, 2008

And you can access the highlights of the bill on-line here:

Blackburn Denounces Another Sham “No-Energy” Energy Bill
Terry Frank
TerryFrank.net
September 16, 2008

---

So what does it mean when the Chairman of the House Ways and Means Committee doesn't understand the tax code? It means that the current tax system must be scrapped and rebuilt.

From the Associated Press:

Rep. Charles Rangel paid no mortgage interest on a beach resort property for about 15 years, a lawyer for the powerful House committee chairman said Friday. The New York congressman's lawyer, Lanny Davis, told The Associated Press that Rangel got his no-interest deal for the villa in the Dominican Republic because he was an original buyer in the resort development. The Democratic chairman of the Ways and Means tax-writing committee has come under scrutiny for his vacation property and apartments he rents in his home district of Harlem. Davis said Rangel failed to report rental income from the resort property on his taxes, but didn't realize it was necessary because of the way the deal was structured.

Uh-huh. Rep. Rangel is supposed to be the foremost expert on tax law in America and we are supposed to believe he doesn't understand the system? I've got two competing theories on that.

1) He does understand the system and was trying to game it for personal gain.
2) The tax code is now so complicated and convoluted that it is no longer a workable tool and must be done away with.

Either way, Rangel's little caper shows, with clarity, yet another reason why we must get rid of the current tax code and replace it with the FairTax.

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 neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It 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 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.

The FairTax:

• Enables workers to keep their entire paychecks
  
• Enables retirees to keep their entire pensions
  
• Refunds in advance the tax on purchases of basic necessities
  
• Allows American products to compete fairly
  
• Brings transparency and accountability to tax policy
  
• Ensures Social Security and Medicare funding
  
• Closes all loopholes and brings fairness to taxation
  
• Abolishes the IRS
  

The FairTax also addresses three end-goals that no other tax reform plan speaks to:

1) It removes forever the power of the IRS to intrude on private American lives.
2) It removes forever the power of K Street lobbyists to influence Congressional tax legislation.
3) It prevents hidden taxes from being passed along to the consumer.

You can access the original article on-line here:

When The Ways And Means Chairman Doesn't Understand The Tax Code...
Associated Press via Americans For Fair Taxation
September 2008

Judge Calls IRS 'Illogical" And Socialized Health Care Horror Stories

Everyday the frustration grows. Everyday, more people sign on to do the right thing: get rid of the IRS and our idiotic tax code.

Most Americans strongly favor such a move. The few who do not favor such a move are those who are somehow benefitting from the current set-up. Take for example Barack Obama. Part of his campaign platform relies on manipulating the current tax code so as to increase taxes on the employers while decreasing taxes on others. Good for buying votes, bad for the economy and for the businesses that have to spend even more time and money dealing with the new complications of a modified tax code.

I'm not picking on B. Hussein Obama specifically, but his Presidential campaign underscores my point. He is an example of someone who will benefit under the current system (i.e. it could bring him more power) while the rest of us suffer by having to pay more so he can get his benefit.

Charles Ulrich is one of the many Americans out here in reality who has had to deal with an invasive and abusive IRS. But, he did something very few have done: he fought back and won.

From Americans For Fair Taxation:

The accountant from Baxter, Minn., challenged the method the IRS has used for more than 20 years to tax shares and cash distributed by mutual life insurance firms to their policyholders when they reorganize as public companies. A federal court recently agreed with his interpretation. ... The dispute arose when more than 30 mutual life insurance companies became publicly traded corporations in the late 1990s and earlier this decade, in a process known as "demutualization." ... All told, roughly 30 million policyholders received distributions, Ulrich estimates. MetLife Inc. provided over $7 billion of stock to about 11 million policyholders when it went public in 2000, while Prudential distributed $12.5 billion in stock to another 11 million. The IRS held that the recipients hadn't paid anything for the shares and owed taxes on the full amount when the shares were sold. Cash distributions also were fully taxable, the IRS said. That didn't sound right to Ulrich, 72, an accountant for 49 years. He began researching the issue in 2001, when he received shares from two companies, Prudential and Indianapolis Life. Ulrich concluded that policyholders had paid for their ownership rights through their premiums so the distributions should have been tax-free. That could make a significant difference in what a taxpayer owes. If a company distributed shares worth $30 and a recipient subsequently sold them at $32, under the IRS' view they would pay taxes on all $32. Under Ulrich's interpretation, they would owe taxes only on the $2 per share.

One of Ulrich's clients sued the IRS:

Judge Francis Allegra of the Court of Federal Claims in Washington sided with Fisher and called the IRS' view "illogical" in an Aug. 6 decision. He ordered the agency to refund $5,725 in taxes plus interest to the trust overseen by Fisher.

Now, before you start going off on how $5000 is a reletively small amount, remember that the principle here is how an abusive IRS can be defeated on other fronts as well.

This is one of the many reasons I support the FairTax.

You can access the complete article on-line here:

Judge Calls IRS Unreasonable, CPA Wins Case After Threats
Christopher S. Rugaber
Yahoo News via Americans For Fair Taxation
Aug 24, 2008

And you can learn more about the FairTax here:

Americans For Fair Taxation

---

And here are some more example of what Socialized medicine will bring for us. From Merrill Matthews at TownHall:

Democratic presidential candidate Barack Obama, in a rare moment of honesty on what he’d really like to do about health care reform, recently asserted that if we were starting from scratch he would probably choose a single-payer health care system. That’s a system in which people pay higher taxes and the government pays most medical bills. Obama’s not alone in that opinion. Filmmaker Michael Moore took his “Sicko” audience to England, among other places, where we learned that doctors in that single-payer system made good salaries, had nice homes and cars, and patients were very satisfied. But anyone who reads the English press will find a different message, including waiting lines, angry patients, rationed and often subquality care. Consider these recent news stories about England’s National Health Service (NHS) quoted directly from the British press. • Twice Katie asked for a [Pap] smear test, but was told she was “too young” to need one. Now 24, she is dying from cervical cancer, one of many young women who have fallen victim to a scandalous change in health policy. (London’s Daily Mail, June) • A man with terminal cancer has been refused a drug by the NHS that could extend his life — despite offering to pay part of the cost himself. . . . David Swain's offer to meet the monthly £2,000 cost of Erbitux was refused, he said, because the National Institute for Health and Clinical Excellence [a government body] ruled it was too expensive. (Yorkshire Post, March, emphasis added) • Health service dentists have been forced to go on holiday or spend time on the golf course this month despite millions of patients being denied dental care. . . . Many [dentists] have fulfilled their annual work quotas allotted by the National Health Service and have been turning patients away because they are not paid to do extra work. This is despite the fact that more than 7m[illion] people in Britain are unable to find an NHS dentist. (The Times of London, March)

This is what awaits us if we vote to destroy our privatized health care system, which, despite its many faults, is light-years better than any socialized system.

You can read more Socialized Medicine horror stories at the following website:

Big Government Health

Click on the "Health Care Horror Stories" Link.

You can access the complete column on-line here:

The Failures Of Government-Run Healthcare
Merrill Matthews
TownHall.com
August 26, 2008

Rep. John Linder Statement On the FairTax, July 23, 2008

I repeat these messages every chance I get:

Rep. John Linder July 23, 2008 Statement on the FairTax Like all the great nations and societies of history the United States is rapidly coming to the end of its existence as a great and powerful country. The shackles of our nearly 70,000 page tax code are making us less and less able to compete in the global economy. Our tax on capital is cutting our businesses off at the knees. Our highest earners have half their income confiscated by the IRS. All of these taxes along with the cost of complying with nearly unfathomable tax regulations put us at a severe disadvantage as competitors in the global economy since these expenses must be added to the price of the goods and services we sell. Ireland with its business friendly tax laws has experienced a huge economic boom while because of its punitive taxes the United States has experienced an economic slowdown. The Irish are praying that we do not adopt the FairTax. They recognize that the relocation of American companies to Ireland was precipitated by our smothering taxes on capital and labor. Ireland realizes that the establishment of the FairTax would give America the best business climate in the world drawing its American companies back home along with attracting many other foreign businesses. The passage of the simple, fair, and transparent FairTax Bill, only 132 pages long, will abolish all Federal income taxes, including personal, estate, gift, capital gains, alternative minimum, corporate, payroll, and self-employment taxes, and replace them with one simple, visible, personal consumption tax. It would tax what we remove from society by consumption instead of taxing what we contribute to society by production and investment. Every American household would receive a cash distribution every month to cover the consumption taxes they would spend for their basic nourishment, housing, transportation, and medical needs. There will be zero taxes paid for necessities. Beyond what Americans spend for necessities 23% of what they choose to spend at the retail level for personal use will be forwarded to the treasury. The FairTax will replace dollar for dollar the current revenues confiscated by the IRS. Politicians have been changing the tax code since 1913 to gain the favor of one voting bloc or another. We have had some 16,000 changes to the code since the mid-eighties and the problems these changes were supposed to help have been exacerbated or replaced with other problems. Therefore, the changes go on and on and on and the power it yields to our politicians corrupts them more and more and more. Our tax code has driven $2 trillion into the underground economy costing us about $50 billion in tax collections. Our tax code has driven $12 trillion into offshore financial centers. These funds should be working in our markets and banks. We are spending between $400 and $500 billion each year just complying with the code. That money is a total and unnecessary loss to the economy. Everybody complains about the complexity, unfairness, and intrusiveness of the IRS. Our politicians in response to our complaints all claim to be for reforming the tax code but reforming it is not the solution. It does not need reforming. It needs to be replaced by the FairTax. Top American businessmen, tax experts, and economists have devoted years to the development of the simple, fair, and transparent FairTax Bill. These experts spent some 12 years formulating the FairTax Bill. At the pace of our “do nothing” Congress it would take 1200 years to reform our hopelessly complicated Tax Code. Tweaking the Tax Code fixes nothing. Getting rid of the IRS fixes everything. When John Linder and some of his FairTax supporters presented the FairTax Bill to former Secretary of the Treasury, John Snow, he said, “You have just proposed the largest magnet for capital and jobs in history.” It is a good thing for all Americans for the United States to be the outsource destination for jobs. It is a good thing for all Americans for our nation to be the world’s safest and most stable tax haven. The FairTax will give us these results as well as a business climate that will expand freedom.

You can access the original column on-line here:

Rep. John Linder July 23, 2008 Statement On The FairTax
Americans For Fair Taxation
July 25, 2008

Congress Fiddles While The Economy Burns

Got this in my email from FairTax.org. Read it. It's good:

Dear FairTax supporters, Our cause continues to gather steam in hometown America—while, with smoke in the air, Congress fiddles. Could it be more obvious that we will have to save the nation from our own elected officials and candidates? Retirement investments, savings and college education accounts are evaporating as the stock market falls—while at the same time leading economists predict that trillions of dollars can and will flow into the United States economy after enactment of the FairTax. Candidate Obama signals a desire to raise the amount of money the government takes from the growth of savings and investments while the country has the lowest savings rate since the Great Depression. With gasoline, food prices and inflation rapidly escalating and housing values falling, former Senator and John McCain economic adviser, Phil Gramm, says we’re all just a nation of “whiners” and the economy is really just fine. Candidate McCain has changed his earlier Iowa tune and now tells audiences that the FairTax is not the answer. Congress and the White House borrow $165 billion from other nations to finance taxpayer rebate checks to stimulate the American economy and ignore the wasted $265 billion annual cost of citizens and businesses preparing income tax returns. Meanwhile, the powerful Chairman of the House Committee on Ways & Means, Charles Rangel, practices politics as usual and solicits big business for big contributions to his Charles Rangel Center in New York City—and with a wink and a nod Washington adds more loopholes and tax gimmicks for favored interests. The United Nations concluded this week that three-quarters of the reason for higher food prices can be traced back to turning agriculture to bio-fuel production—here in the U.S. it is another recent ham-handed tax break by the meddling Ways & Means Committee. While leaders ignore the crisis, citizens work for a FairTax solution While "leaders" turn a deaf ear to our destructive tax system or offer medicine that will worsen the economic downturn, hometown America is quietly and steadily moving us toward the FairTax. Hundreds of people recently turned out for a FairTax seminar in Georgia designed to equip average citizens with the means to spread the word to fellow Americans and wake up elected officials. The Postal Workers Union is considering embracing the FairTax at its national convention. In Oklahoma, all but one member of the Congressional delegation have co-sponsored FairTax legislation because of the determined and relentless work of local advocates. A documentary team from Georgia is traveling the nation recording the determined but under-financed FairTax movement. XM Satellite Radio just featured FairTax.org on "Open Road," Channel 171, heard across the country and a favorite of long-haul truckers. Host Dave Nemo enthusiastically added the FairTax web link to his home page. Other radio hosts from Michigan, Virginia, California, Florida, Arizona, Colorado and elsewhere and the always popular Neal Boortz and Herman Cain continue to support the issue with their audiences. Candidates for Congress in West Virginia, Florida, Georgia, Colorado, Arizona and elsewhere have embraced the FairTax. At kitchen tables across the country FairTaxers are finding their own ways to push the movement--from YouTube and MySpace videos to letters to the editor to friendly conversations with neighbors. Keep the faith—and keep the FairTax movement growing! It's our nation and we'll have to save it from the original bad idea of an income tax that just keeps getting worse at the hands of tax lobbyists and the corrupted Congressional tax writing process. Now is the time for all citizens to band together and make the case for the FairTax. Tell your newspaper editor, tell your elected officials and tell your friends, neighbors and colleagues. Our country, our children and our future depend on this common sense solution—and it could not be more needed than right now. For every FairTaxer who writes a letter to Congress, goes to a Town Hall meeting, talks with a candidate, writes to the local newspaper, wears the FairTax cap or proudly displays the FairTax window sticker—thank you! For those who feel that someone else will get it done—wake up and smell the coffee because this lifeboat needs your oar. Our progress is slow but steady. Recruit one more FairTaxer and move us forward one more step at a time. Together we can make it come true. Sincerely, Ken Hoagland Communications Director

What Is A Billion? What Taxes Are You Paying? Do Politicians Have Any Idea What They Are Spending Money On?

What is a billion? Let's put it in perspective here. From an email I recieved:

The next time you hear a politician use the word 'billion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money. A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of it's releases. A. A billion seconds ago it was 1959. B. A billion minutes ago Jesus was alive. C. A billion hours ago our ancestors were living in the Stone Age. D. A billion days ago no-one walked on the earth on two feet. E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it. While this thought is still fresh in our brain ... let's take a look at New Orleans ... It's amazing what you can learn with some simple division. Louisiana Senator, Mary Landrieu (D) is presently asking Congress for 250 BILLION DOLLARS to rebuild New Orleans. Interesting number ... what does it mean? A. Well ... if you are one of the 484,674 residents of New Orleans (every man, woman, and child) you each get $516,528. B. Or ... if you have one of the 188,251 homes in New Orleans , your home gets $1,329,787. C. Or ... if you are a family of four ... your family gets $2,066,012. Washington, DC: "HELLO!" Are all your calculators broken?? Accounts Receivable Tax Building Permit Tax CDL License Tax Cigarette Tax Corporate Income Tax Dog License Tax Federal Income Tax < BR>Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax Fuel Permit Tax Gasoline Tax Hunting Licen se Tax Inheritance Tax Inventory Tax IRS Interest Charges (tax on top of tax) IRS Penalties (tax on top of tax) Liquor Tax Luxury Tax Marriage License Tax Medicare Tax Property Tax Real Estate Tax Service charge taxes Social Security Tax Road Usage Tax (Truckers) Sales Taxes Recreational Vehicle Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone Federal Excise Tax Telephone Federal Universal Service Fee Tax Telephone Federal, State and Local Surcharge Tax Telephone Minimum Usage Surcharge Tax Telephone Recurring and Non-recurring Charges Tax Telephone State and Local Tax Telephone Usage Charge Tax Utility Tax Vehicle License Registration Tax Vehicle Sales Tax Watercraft Registration Tax Well Permit Tax Workers Compensation Tax STILL THINK THIS IS FUNNY? Not one of these taxes existed 100 years ago ... and our nation was the most prosperous in the world. We had absolutely no national debt ... We had the largest middle class in the world ... and Mom stayed home to raise the kids. What happened? Can you spell 'politicians?' And I still have to press "1" for English.

Sad but true.

We should have three top priorities:

1) Pass the FairTax.
2) Control Government Spending.
3) Produce oil and energy right here at home.

The Numbers Don't Lie. We Need To Get Rid Of The IRS!

As tax time approaches, let's look at some of the data that has been compiled about the most intrusive, abusive and outright wasteful agency in the U.S. Government: the Internal Revenue Service.

This opening paragraph from the National Retail Sales Tax Alliance webpage of Tax Facts summarizes it very nicely:

The IRS is not only the most feared of government agencies, it also is one of the biggest and most expensive. The agency has more employees than the Central Intelligence Agency, Federal Bureau of Investigation, and Drug Enforcement Agency combined, and its budget makes it a bigger consumer of tax dollars than the Departments of Commerce, State, or the Interior.

But, let's look at some of the numbers, shall we?

New Evidence 12,000 = The number of additional IRS employees needed to answer phone inquiries from confused taxpayers during tax filing season. Because taxpayers will have nothing to file under a national retail sales tax, additional personnel will not be needed. $1,000 = The hourly collection quota placed on IRS agents auditing individual taxpayers in the San Francisco office. Although collection quotas violate the law, the current system is so complex that the IRS assumes mistakes will be found on every return. There will be no errors with a national retail sales tax because there will be no returns to examine. 62,000,000 = The number of lines of computer code required by the IRS to manage the current tax code. A national retail sales tax will ease the IRS's ongoing computer problems dramatically. 1,420 = The number of appraisals of works of art that an IRS panel performed in order to tax the assets of dead people. Because double taxation under a national retail sales tax does not exist, the absurdity of having the IRS value art would disappear with the death (estate) tax. 3,200 = The number of threats and assaults IRS agents experienced over a five-year period. A fair and simple tax system will reduce taxpayers' frustrations dramatically. What We Already Knew 136,000 = The number of employees at the IRS and elsewhere in the government who are responsible for administering the tax laws. Because the number needed is dictated by the complexity of the tax code, fewer personnel will be needed under a national retail sales tax, and the elimination of the IRS will save taxpayers a significant amount of money. $13,700,000,000 = The amount of tax money spent by the IRS and other government agencies to enforce and oversee the tax code. Both taxpayers and the economy will benefit from the spending reductions made possible by a national retail sales tax. 17,000 = The number of pages of IRS laws and regulations, not including tax court decisions and IRS letter rulings. This page count would be reduced significantly by a national retail sales tax. 5,557,000 = The number of words in the income tax laws and regulations. With a national retail sales tax, there will be no need for a tax code that is nearly seven times longer than the Bible.

The NRSTA website has many more data references like the ones above. But what can we do about it? The answer is simple: Abolish the IRS. If we could replace the Income Tax system with a National Sales Tax System, here are the numbers we can look forward to:

0 = The number of taxpayers under a national retail sales tax who will have to calculate depreciation schedules. 0 = The number of taxpayers under a national retail sales tax who will have to keep track of itemized deductions. 0 = The number of taxpayers under a national retail sales tax who will need to reveal their assets to the government. 0 = The number of taxpayers under a national retail sales tax who will lose their farms or businesses because of the death (estate) tax. 0 = The number of taxpayers under a national retail sales tax who will have to pay a double tax on their capital gains. 0 = The number of taxpayers under a national retail sales tax who will have to compute a phase-out of their personal exemption because their incomes are too high. 0 = The number of taxpayers under a national retail sales tax who will be subject to the alternative minimum tax--those forced to calculate their tax bill two different ways and then to pay the government the greater of the two amounts. 0 = The number of taxpayers under a national retail sales tax who will have to pay taxes on overseas income that already was taxed by the government of the country in which the income was earned. 0 = The number of taxpayers under a national retail sales tax who will have to pay taxes on dividend income that already was taxed at the business level. 0 = The number of taxpayers under a national retail sales tax who will be taxed on interest income that already was taxed at the financial institution level.

You can access the complete article on-line here:

Interesting Tax Facts
NTRSA
Virginia Chapter










Petition For The FairTax

The FairTax Can Fix The Recession

A good, short essay about how the FairTax would fix the recession we are sliding into right now. Full text here:

Instead of borrowing money from China to pay a "rebate" to American taxpayers, the FairTax makes America THE "offshore" investment magnet for the world. We have lost more than 12 trillion dollars of American capital to offshore locations in recent years. That money, jobs and a whole lot more capital will flow here when we have eliminated the corporate income tax, capital gains taxes and personal income taxes. And as long as we're counting wasted money, tax preparations, hours spent on returns, tax lawyers and accountants cost our economy $265 billion annually. To that figure add the $350 billion the income tax system comes up short on taxes owed every year. My goodness, that wasted money is coming close to the size of a stimulus package. Our tax system is damaging the American economy because the tax writing process is not about the economy--or taxpayers. It is all about Members of Congress having the power to reward friends and contributors, punish opponents and inept attempts to manipulate citizen behavior through the tax code. Add to that the profit motive of of thousands of tax lobbyists and you end up with 67,500 pages of tax regulations and a system that rewards debt over wealth, encourages cheating and mistakes, and has enough gimmicks to feed an army of academicians, tax lawyers and lobbyists who study the arcania. For Pete's sake, we've turned the CPA profession into seeing eye dogs leading us through the maze of tax regulations instead of a profession skilled at helping us grow our savings and investments. Can the American people escape being victimized by the self-interest of Congress and force enactment of the FairTax? The question is really whether the citizenry can still direct the government, as the Founding Fathers envisioned. In this, the FairTax idea, now widely distorted by those who profit from the income tax system, is more than a better tax system--it is a test of whether our form of Democracy still works hundreds of years after our first tax revolution. Ken Hoagland FairTax National Communications Director

You can access the original essay on-line here:

The FairTax Fixes The Recession
Ken Hoagland
FairTax.org
January 31, 2008

The FairTax Calculator

When Copernicus, Kepler and Newton proposed their theories about how the motions of the planets were governed by the physics of the solar system, they all had a very unique problem in common. People of their time were so entrenched in the mistaken teachings of Aristotle that it was a nearly insurmountable goal to get them to view the universe any other way.

For example, we do not feel the earth move underneath our feet, and therefore assume that it is solid and unchanging. But in contrast, we watch the sun, moon and stars rise in the east, move across the sky above us and then set in the west. It is only natural that primitive humans would assume that the earth was fixed and stationary and the celestial bodies went around the earth rather than the earth being one of several planets that went around the sun.

I think the same argument applies to taxation. We are so entrenched in the idea of government taxing our income, our homes, our cars and numerous other things that many are unable to view the system of taxation any other way.

Well, we know that as time went on, Copernicus, Kepler and Newton were vindicated and today, we teach schoolchildren the truth about planetary motion. I believe the same will happen with the FairTax. But the process will not be easy. New ideas rarely have an easy time of gaining acceptance.

Thus, to help ease the fear of the unknown of this new idea known as the FairTax, the FairTax Foundation has provided a Fair Tax Calculator to show people, in real numbers, the benefits of the FairTax over the current system.

To use the calculator, you will need the following information:

Are you self-employed? Are you married? How many members in your household? What is your gross annual income? What percentage of your gross income did you pay one your tax return? Are you filng joint or single? Are you recieving Social Security benefits? Do you have a mortgage? What is the outstanding principle on the mortgage? What is the term of your mortgage? What is the interest rate of your mortgage? How much do you invest in IRA's, 401k's and other pretax plans? How much do you invest in non-pretax plans? What amount do you give to charity every year? How much do you spend on tuition? How much do you spend on gifts to friends? How much do you spend on used items?

Note that none of this giving away any personal information. The calculator is completely anonymous. And if the data entry looks overwhelming, remember that for the vast majority of people, most of these answers will be zero.

I did a calculation on myself and the numbers were pretty eye-opening. My purchasing power went from $34,046.34 under the current system to $51,399.00 under the FairTax and my effective Federal Tax Rate went from 32.08% under the current system to 14.44% under the FairTax.

That's a big difference. Imagine if millions of taxpayers across the spectrum were to realize benefits like this. What a jump start that would give to our economy! Billions of dollars would be freed up to become capital investments and the United States would become the world's largest tax haven thereby encouraging foreign investment rather than foreign ownership. Jobs that have been outsourced off-shore would return to the United States and unemployment would drop.

What does the FairTax do? It replaces the entire Federal Tax Code with one simple, easy to understand and completely visible national sales tax on new goods and services. No more income tax, no more hidden taxes, no more death tax, no more any tax on personal wealth or income.

The FairTax:

• Enables workers to keep their entire paycheck
  
• Enables retirees to keep their entire pension
  
• Refunds in advance the tax on purchases of basic necessities
  
• Allows American products to compete fairly
  
• Brings transparency and accountability to tax policy
  
• Ensures Social Security and Medicare funding
  
• Closes all loopholes and brings fairness to taxation
  
• Abolishes the IRS
  

Additionally, the FairTax is the only Tax Reform plan that addresses the three following end-goals:

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.

You can calculate your own benefits under the FairTax at the following link:

FairTax Calculator (Requires Flash 9, a free download)
FairTax.org

You can learn more about the FairTax on-line here:


Americans For Fair Taxation

Another Response To John Bowyer's Misinformed Criticism Of The FairTax

Looks like lots of people read John Bowyer's January 9, 2008 column where he sarcastically questions the FairTax. Over at TownHall, William Phelps has a response to Bowyer's questions. Here are some of the more pertinent ones:

Q: Are sales taxes, where they area currently in operation, simple and free from special interest lobbying? Since there are no exemptions and no tax shelters under the fair tax, there would be no work for the tax lobbyists in Washington who currently manipulate the income tax for the special interests. Because the fair tax includes the prebate reimbursing on the necessities of life, there is no need for exemptions. Fair tax is not based on any existing system, but was developed based on original research by leading institutions and economists on the charge to develop of the best tax system for the federal government.

Since the tax applies uniformly to all new goods and services a tax lobbyist would have to get Congress to consent to changing the tax on one single commodity, say lumber. However, in order to make up the shortfall, Congress would have to raise the tax on a comparable commodity, say plumbing supplies. Such a manipulation of the tax code could not be hidden and would immediately be seen by consumers (as the FairTax applies at the retail level where consumers pay the bill) and Congress would face major negative publicity as a result, not just from constituents, but from business leaders of other industries. That would be incredibly bad for re-election prospects.

Q: Isn't it that the rate is not really 23% but 30% at least, because it's tax inclusive? Bowyer doesn't understand that inclusive and exclusive ways of computing rates don't change the dollar amount of the tax. Either way the tax is the same $23 per $100. Computed the same inclusive way as the income tax, the fair tax is $100 -$23 = $77. Computed the exclusive way it is $23 divided by $77. =30%. If you computed the income tax on the exclusive basis, the 25% bracket would be the 33% bracket, or $25 divided by $75 =33%. Either way it is the same $25 tax per $100.

This just shows how desperate opponents of the FairTax are to find a flaw in the system. They parse words and play with numbers to make people think the FairTax is more than it really is. But as Phelps notes, it does not matter what rate you believe in, in real numbers, the tax on a $100 purchase will always be $23.

Q. How do we determine interest rate portion of the mortgage? Just as now, the market rate is the interest rate, but market interest rates will fall to the level of tax free bonds today which will make it easier for home buyers who will be paying the purchase price in pretax dollars, rather than after tax dollars under the income tax. The borrower and lender will continue to state the interest rates in the debt instruments, but this is irrelevant to how the home would be taxed. The fair tax applies to the purchase price of the home, if it is new.

This last question (as well as the question about used goods being taxed) is why I firmly believe that Bowyer never even read the FairTax Plan. Had he done so, these questions would have seemed stupid to him.

You can access the complete column on-line here:

A Fair Defense For The Fair Tax
William Phelps
TownHall.com
January 28, 2008

Herman Cain Supports The FairTax

Despite naysyers like Bruce Bartlett and Jerry Bowyer and others who throw uninformed criticism at the FairTax, the FairTax movement is growing. One day, the FairTax will be a reality and the United States will undergo a major economic boom as a result, regardless of how loudly people like Barlett and Bowyers yell or how many times they stamp their feet in protest.

The FairTax, unlike any other proposed tax reform plan, would address three end-goals:

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.

Curiously, whenever anyone criticizes the FairTax and then is asked how these three end-goals are to be achieved through any other tax reform plan, they quickly become quiet, almost as if they are embarrassed for not having an answer.

In his January 17, 2008 column, Herman Cain looks at the FairTax movement with regards to the 2008 Presidential Primary:

Immediately after the Iowa Straw Poll last August, the noted and respected journalist George Will referred to the FairTax believers who supported Mike Huckabee as “those FairTax people.” He made it sound as if the people who helped Huckabee finish an unexpected second place among Republican presidential contenders were politically challenged, unfit to associate with the political elites. Jay Bookman, a columnist with the Atlanta Journal-Constitution, referred to the FairTax believers in his editorial on Dec. 23, 2007, as a “cult.” He called it “Huckabee’s Fantasy FairTax” as Huckabee was surging in the unreliable presidential polls leading up to the Iowa caucuses held on January 3.

And yet, neither Will nor Bookman has come up with an alternative proposal that addresses the three end-goals stated above.

Cain continues:

Because of George Will’s history of writing thoughtful and credible opinion articles, I am willing to give him the benefit of the doubt that his comment was just a slip of the tongue. This may have been motivated by his acquired skepticism of any dramatic changes being possible in the halls of Congress. Personally, I hope this was indeed the case, because I would miss George’s political insight if he were forced to take a Don Imus-like sabbatical. On the other hand, Bookman clearly displayed his ability for misinformation and factual inaccuracies, too many to spend valuable time and space refuting. Anyone familiar with the facts of the FairTax can peruse his attempted assassination of the FairTax for himself. One would also note that pure media bias could hardly be an excuse. If Huckabee’s success continues, the greater the attempts will be to derail him by the liberal opposition, the Republican establishment and, naturally, his Republican presidential rivals. The FairTax is the biggest cure for our tax code insanity on the political table. Mike Huckabee’s courageous embrace of the idea has heightened interest in it by many, and attracted contempt against it by many more. Since death to the FairTax has not been achieved swiftly by skepticism, denial or distortion, then we can expect repeated attempts to kill the FairTax by a thousand cuts. Fortunately, there are millions of believers in the FairTax, and they have been around much longer than the current presidential race. It is a legitimate movement in this country that is based on solid economics and analysis. The real cult consists of people who are skeptical of dramatic changes, and those who are content with allowing this country to drift into economic mediocrity.

No matter what you think about Mike Huckabee or his personal choices in life, he has brought the FairTax to national prominence. It may not be such a big player in this election, but in 2012, after millions more people have had the chance to read the real FairTax Plan rather than someone's misinformed criticism, the FairTax will loom large in the campaign.

You can access the complete column on-line here:

The Attempted Assassination Of The FairTax
Herman Cain
NorthStar Writers' Group via FairTax.org
January 17, 2008

Also, Professor Laurence J. Kotlikoff, Professor of Economics at Boston University, has this rebuttal to Bruce Bartlett's criticism of the FairTax:

Why the Fair Tax Will Work
Laurence J. Kotlikoff
FairTax.org
January 15, 2008

And here is a rebuttal to Jerry Bowyer's column criticizing the FairTax. It should be noted that had Mr. Bowyer actually read the FairTax Plan before commenting on it, he would have found the answers to the very questions he posed with such sarcasm.

The FairTax Crowd Answers Jerry Bowyer
Louis R. Woodhill
FairTax.org
January 14, 2008


Americans For Fair Taxation