Jumping on the FairTax bandwagon
("A bit!" Dozens of readers cry, outraged.)
Yeah, well... I don't think the government should be in the business of handing out goodies, however important those goodies may be. It should not fund art or science or social programs or universities or schools -- especially schools, but don't get me started on Dewey's Folly -- or space exploration or... really anything other than police, army and courts. Taxation to fund these things is incredibly immoral. "Taxation is theft" is a wild slogan, but in some cases, it's true.
And maybe when I was younger, I would have opposed any attempt to fix the insane tax system in this country, on the theory that the more a mess it is, the sooner it'll crash. But hey
Which brings me to the FairTax. This is a proposal that has been around for about 10 years now, and I've been trying to poke holes in it for a while now, without much in the way of success. And I'm good at poking holes in things. I am a veritable Cassandra. If it's got a flaw, that's the first thing that jumps out at me. As you might imagine, it makes me pretty popular at parties.
But the FairTax looks like the genuine deal. It's revenue neutral, which is bad, in the sense that we need to stop the thievery, but good, in the sense that it will improve things immeasurably. You can see a sketch of the plan here, but let me give you the salient points:
- The income tax and all payroll, personal, gift, estate, capital gains, Social Security, Medicare (etc., etc., ad nauseum) are eliminated, and the 16th Amendment to the Constitution, which permitted the income tax, gets repealed.
- These taxes are all replaced with a single national retail sales tax on new goods and services being purchased for personal consumption.
- A "prebate" equal to the amount of the poverty level is given to every holder of a valid Social Security number, every month, to offset the sales tax for basic necessities.
No more Form 1040. No more IRS. April 15 becomes just another day. No more being taxed more and more just because you're more productive. You take home every penny you earn, and you only pay taxes if you buy new things.
This is not a VAT (Value Added Tax). With a VAT, taxes are charged and collected at every stage until and including your purchase. With a 15% VAT, you think you're paying 15% in tax, but every successive stage of production had to pay VAT, so they passed that on in higher prices to the next guy. You're really paying a lot more than just 15%.
The FairTax looks high. It's 30%. But eliminating corporate taxes as well means that they don't have to pass those tax expenses on in the price of things you buy. So if something costs $100 today, it's likely to cost $77 after the FairTax goes into effect. When you pay 30% tax on it, you're just back to the original price of 100%.
There's no filing with the FairTax. Storekeepers will have to collect it, but they do that now in most states anyway, and the FairTax allows for states to do the collecting. Do you know how much the income tax costs in this country? Every year, it costs $225 billion. That's "billion", with a "b". That's three times what the war in Iraq has cost the United States so far, and it's paid every single year.
The FairTax falls on everyone. Today, drug dealers and prostitutes and criminals don't pay income tax on what they earn. Anyone who can afford a good tax accountant can manage to get away with paying very, very little in the way of income tax. Once taxes are moved from income to consumption, everyone gets taxed on an equal basis. If a millionaire buys a yacht, he pays 30% on it. If a kid buys a candy bar, he pays 30% on it. If a poor person buys a bottle of milk, he pays 30% on it, but he's already received a grant for that at the beginning of the month.
Today, everyone is at risk of an audit from the IRS. They have their own courts, with rules that are very different from regular courts. It is virtually a government within the government, and its first rule is that we are guilty until proven innocent. Every time you file a tax return, you have to worry about whether you might have made an honest mistake that could bring the wrath of the IRS down on your head. With the FairTax, that can't happen. You only pay tax at the cash register.
I recommend that everyone check out http://www.fairtax.org, http://www.fairtaxvolunteer.org, and get yourself a copy of The FairTax Book. Call your senators and representatives and tell them to get moving on this. There is no downside.