“I object and take exception to everyone saying that Obama and Congress are spending money like a drunken sailor. As a former drunken sailor, I quit when I ran out of money.” Bruce L. Hargraves, U.S. Navy, retired, quoted from the Letter to the Editor section, Northern Wyoming Daily News
As Congress continues to debate whether or not to raise the debt ceiling, Americans wonder when they will figure out that what we really want is for them to spend less so we can keep more in our pockets. The tax code as currently structured seems to only benefit a certain number of Americans: either those that can ensure a reelection by their large donations or those that can ensure it by their vote. Politicians have been tinkering along the edges of the tax code for their personal benefit or their social engineering schemes for far too long. We can certainly come up with a better and more efficient system than the current mess we have now. One of the ideas being proposed is the idea of a national sales tax, or the Fair tax, to replace it.
The Fair Tax is not an income tax, but a national sales tax made on retail transactions, coupled with a “prebate” sent to Americans each month based on their income and family size. It would replace much of our current federal income tax system, including the forced payments we make into Medicare and Social Security, as well as the payroll taxes. Under the Fair Tax, no American would be able to avoid paying taxes, unlike the current system that allows 51% of Americans to avoid paying federal taxes at all. Gone would be the loopholes, preferential treatment, and employees being paid under the table. Everyone would now have skin in the game.
One the best benefits of the Fair Tax would be the complete elimination of the IRS. Tax collection would become more efficient and economical, with no more need to conduct complex audits. Instead of processing the paperwork of 132 million income tax filers, our government would now only have to process the paperwork of 1.1 million plus businesses. American taxpayers could also be in control of the amount of tax they pay, as they would only be taxed on what they choose to buy, instead of all their labor. Plus, the prebate mentioned above would be calculated to refund the taxes on necessities, such utilities and food. Under the Fair Tax, both savings and investments would be encouraged, as only consumption would be taxed. And, for the first time, there would be more transparency in the tax code; no longer could politicians bury special interest freebees into thousands of pages of IRS rules and regulations. Crony capitalism would be publically apparent, making it easier to hold those that represent us more accountable.
Of course, like with any tax change restructure, it is important that we also try to foresee any possible means for corruption. As James Madison once said, enlightened statesmen will not always be at our government’s helm, so we must prepare for the unenlightened. Therefore, if a Fair Tax is ever implemented, the 16th Amendment must first be repealed, otherwise we risk being doubly taxed, both on our income and via a national sales tax. And, the sales tax must be low enough so as not to stifle growth. Finally, the American public needs to be well educated as what the change means to them, as it will be completely different than what we have ever known; otherwise it may not be seen as politically palatable by our skittish representatives.
I believe that the national sales tax and the flat tax are two sides of the same coin. The only difference between them is where the tax is actually placed. However, regardless of any tax reform that we make, Americans want to be taxed less, not more. Therefore, we must be careful to not allow our politicians shift the tax debate away from how much wealth is being confiscated to how the wealth is being confiscated. Any tax reform should ultimately result in a complete revenue reduction, not just revenue neutrality. We must starve the beast of government, so Americans can regain both their money and their liberty.
Over 230 years ago a bunch of British colonists tossed boatloads of tea into the Boston Harbor to protest an unfair tax and the preferential treatment it gave to one government special interest. They acted on principles of liberty and fairness, and demanded the same from their government. What a radical idea.
“If we don’t do something to simplify the tax system, we’re going to end up with a national police force of internal revenue agents”. Leon Panetta (b. 1938), current Director of the CIA