The Fair Tax Act Can Benefit All Americans
Steve HayesOur Chairman’s Report this week is written by Chad Hagen and published in the Epoch Times on March 3, 2023. Chad is a member of our Advisory Board.
Here is his article.
The Fair Tax Act Can Benefit All Americans
March 3, 2023 Updated: March 3, 2023
On Jan. 10, 2023, Rep. Buddy Carter (R-Ga.) introduced H.R. 25, the Fair Tax Act, to replace the current tax code with a national consumption tax known as the FAIRtax.
“Each household will receive a monthly prebate based on federal poverty levels and household size that will allow families to purchase necessary goods, such as food, shelter, and medicine, essentially tax-free. This is similar to our current individual exemption and refundable tax credit system,” said Rep. Carter.
Reps. Andrew Clyde (R-Ga.), Jeff Duncan (R-S.C.), Kat Cammack (R-Fla.), Scott Perry (R-Pa.), Bob Good (R-Va.), Thomas Massie (R-Ky.), Ralph Norman (R-S.C.), Bill Posey (R-Fla.), Gary Palmer (R-Ala.), Jim Banks (R-In.), and Barry Loudermilk (R-Ga.) joined Rep. Carter as sponsors of the bill.
The beginnings of the Fair Tax originated in the 1990s. In 1995 and 1996, a number of tax reforms attempting to move away from the present income tax were proposed by Republicans.
Steve Forbes promoted the idea of a 17 percent flat tax, and then the first iteration of a fair tax / flat tax bill was introduced in 1999 by Georgia congressman John Linder.
Since then the “FAIRtax” has become the leading tax reform movement in the country. The bill eliminates all personal and corporate income taxes, the death tax, gift taxes, and the payroll tax, and replaces them with a national retail sales tax.
Further, the Fair Tax would eliminate the need for the Internal Revenue Service and the filing of forms and keeping of receipts. Each taxpayer gets their entire paycheck and the prebate for their family’s size.
Therefore, a taxpayer pays their federal taxes each time there is a purchase of “new” retail goods and retail services.
At the moment, the FAIRtax Act has a good amount of support, but it needs more. Democrats and certain GOP members in Congress are rolling up their sleeves to fight the fight against dismantling our current income tax system. So are special interest groups.
While it’s not surprising that the politicians who oppose the FAIRtax Act may be misguided, or influenced by lobbyists, the irony is that the FAIRtax Act hits tax policy where it matters most, and offers up a worthwhile solution.
If Congress passed the Fair Tax, it would send a signal of accomplishment, progress (the “right” type of progress), and solutions.
Sadly, Washington, D.C., does not like solutions.
At the moment, there is a resistance campaign against the FAIRtax Act. Most pundits and naysayers are focusing on one negative soundbite: that everyone is going to pay a 30 percent sales tax on everything they buy. The critics, however, are forgetting the major point, that under the FAIRtax Act, working Americans will get their entire paycheck, because there is no income tax or payroll tax deduction.
But this is untrue, as Savannah Pointer, from The Epoch Times, reported: “The FairTax Act of 2023 (H.R. 25) states the tax rate would be 23 percent in 2025, with adjustments in subsequent years, and would be in lieu of the current income taxes, payroll taxes, and estate and gift taxes.”
There is also the incorrect rumor that states the poor will suffer while the rich reap the benefits. We’ve all heard this before, and in this instance, it is categorically untrue.
Today, if a family of four earns $3,333 per month ($40,000 annually), the payroll tax rate is 7.65 percent, or $255 per month ($3,060 annually), not factoring in additional income taxes and withholding. If this family filed the earned income tax credit, the family would be eligible to receive $3,274, but this tax credit is not always taken advantage of.
Under the Fair Tax Act, there is no withholding. The family receives the entire $40,000, or $3,333 per month. The family is not taxed on the amount of spending up to the poverty level published by the U.S. Department of Health and Human Services each year (2023 poverty level for a family of four is $39,440 annually). It turns out the actual rate this family ends up paying is 0.0041 percent on their overall income—not 30 percent.
Here is a comparison:
$40,000 Income for Family of Four
Present System FAIRtax
Net spendable income $37,784 $39,835
Effective tax rate 3% 0.0041%
In reality, a national sales tax, an excise tax, is as old as the American revolution. Article 1, Section 8, of the U.S. Constitution provides:
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”
Income taxes were authorized by the Sixteenth Amendment to the Constitution in 1913, but it wasn’t until World War II that withholding federal taxes from our check came into play as a “temporary” measure.
How would the FAIRtax work? Very easily. It would be collected by the states and remitted to the Treasury Department.
As far as state taxes, it depends on which state a taxpayer lives in. I imagine some states would rebel and hike taxes to make a point. At the moment, the only U.S. states without a state income tax are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming. However, many more have indicated that they want to either greatly reduce or eliminate their income taxes.
In Georgia, where I live, a bill will be introduced shortly to abolish the state income tax and replace it with a version of the FAIRtax.
I believe if the FAIRtax is passed, it will invigorate America and increase the likelihood of more Americans achieving the American Dream.
In a day and age where many Americans are pushing for systematic change, we might as well start with changing the federal tax code and try a new system that benefits every American.
Chad’s article clearly shows why we need to enact the FAIRtax now!
We now have the opportunity to force all Members of the House to either vote for the present income/payroll tax system or the FAIRtax.
They either support the corrupt income tax and the IRS or they want to get rid of it. It can’t be any simpler than that.
They either believe in being transparent and showing Americans the true cost of their government or they don’t. They either support the largest transfer of power from government to the people, the FAIRtax, or they don’t.
If they think that the FAIRtax needs to be changed, then they can propose the change. Don’t condemn the entire bill because it has a “flaw” that can be easily addressed. And don’t think for a minute that there aren’t any flaws in the income tax.
Please stand with us and demand that your representative support a much fairer, much simpler and much more efficient way to fund the government—the FAIRtax!
The FAIRtax doesn’t pick winners and losers. Because it taxes spending, not earnings, the FAIRtax lets everyone save for their retirement tax free.
The FAIRtax collects the revenue that the federal government needs to operate but does it in a way that has the least impact on our individual freedom and the least impact on our economic prosperity.
There are no tax returns to file and no records to keep. We pay our federal taxes when we make retail purchases of new goods and services, and there is no need for the IRS. If you sell a used couch or used jet ski online, there is no FAIRtax due on that transaction.
The FAIRtax will allow us to TAKE BACK CONTROL.
The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!
TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us. It will be clearly shown on every retail receipt.
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
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