LETTER TO EDITOR: HERE ARE 30 REASONS TO LIKE THE FAIRTAX PROPOSAL
Editor’s note: Over fifteen years ago, Roger Sherman sent the following letter to the Arab Tribune of Arab, Alabama. His points are just as powerful today as they were when he wrote them, most notably the ability of earnings to compound. You can read the letter at https://www.thearabtribune.com/mountain_views/here-are-30-reasons-to-like-the-fair-tax-proposal/article_8b84348c-e231-5b6f-b414-8c4c027d43f3.html
“Roger Sherman of Arab co-founded the local chapter for the Fair Tax movement with Dan Messenger. Formerly of Sunnyvale, Calif., Sherman works for Lockheed-Martin Space Systems Co. and moved to Arab in 2007 with his wife. [Note in the original publication,]”
Roger wrote:
“There are many, many reasons why I support the passage of the Fair Tax Bill, which would entirely replace the income tax with a federal sales tax. And I keep finding more reasons.
“So far, my list runs to about 50 reasons. Let me tell you more about number one.
“By eliminating the federal income tax, the Fair Tax would give everyone the ability to grow their wealth in ways that currently only the more wealthy can use.
“Here is one simple way. With all of your paycheck to draw on, you can save money and have it compound, tax-free.
“With the income tax, people with enough money to save for their children's college can put it in a tax-advantaged account, a type of IRA. The money is invested, interest is added and compounded every year, and no taxes are taken out when it is spent on college tuition, books, etc.
“Such money compounds much faster than your savings account or investment account because the interest you get on those accounts gets taxed every year.
“But with Fair Tax, every investment account and savings account would compound tax-free. With Fair Tax you would have all your income, so you can save more, and you get tax-advantaged savings.
“You can save for your kids' college, braces, the wedding, that first car. Or save for a down payment, a vacation, the car you have always wanted.
“With Fair Tax, the government would no longer decide whose savings are worthy of tax advantages. Everybody has the advantage of tax-free compounding in any savings or investment. It would apply to all forms of investing.
“My wife received a small amount of stock in the company she worked for. After several years she had 50 shares. Every quarter, those shares paid us a dividend, which was automatically reinvested in more shares of the company.
“Sounds good so far, right? Yet every April my wife was annoyed to discover that we owed $50 or $60 dollars more in taxes due to those dividends. She did not get those dividends to spend, and if the stock price went down (and it did) those dividends are gone for good.
“We never got to spend them, but we still had to pay taxes on them. That's not fair.
“Here is a slightly more complex example of how the Fair Tax levels the financial playing field.
“Most people know that homeowners can deduct the cost of the mortgage interest from their income. This is supposed to make home ownership more affordable by allowing owners to pay part of their mortgage with "untaxed" dollars.
“The way the income tax rules are written, your mortgage interest must reach a certain amount before it will be advantageous for you to itemize it. That means that if you don't make enough to itemize your tax return, you don't get to take this deduction.
“Most taxpayers don't itemize. They will have to pay all of their house payment with the dollars they have left after taxes.
“So the more expensive your house is, the more "untaxed" money you get to spend on your house payment. On the other hand, it also means that if your house is less expensive, you might not get any tax advantage from this deduction.
“Also under the income tax, the richer you are, the bigger you win with this deduction. With Fair Tax, all citizens would get to pay all of their mortgage with untaxed dollars.
“That’s fair.
“Here's how the Fair Tax before Congress would do these things.
“The bill was crafted to change the way the federal government is funded. The Fair Tax 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 that 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 Fair Tax Act (HR-25, S-296) 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 Fair Tax would:
“Enable workers to keep their entire paycheck;
“Enable retirees to keep their entire pensions or Social Security check;
“Refund - in advance - the tax on purchases of basic necessities;
“Allow American products to compete fairly;
“Bring transparency and accountability to tax policy;
“Ensure Social Security and Medicare funding at current levels;
“Close all loopholes and bring fairness to taxation;
“Abolish the IRS.
“If you would like to learn more about the Fair Tax, please come to the next meeting of the Arab Fair Tax Group. We meet at 6 p.m., the first Monday of each month, at Roosters Coffee Barn, across the parking lot from Wal-Mart.”
Editor’s note: I do not know if this group is still active. If you recently published a letter to the editor of your local paper, hard copy or online, I would love to re-publish it here.
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