I’m all fired up about I book I just read, The FairTax Book: Saying Goodbye to the Income Tax and the IRS, by Neal Boortz and John Linder. In a nutshell, all federal taxes (including Social Security and Medicare) would be replaced with a retail tax of about 23%. I think it sounds wonderful! At any rate, even if it’s just a mediocre idea, it can’t be any worse than our current system. Critics say that it would be hard on the poor, but not so. This varies from traditional sales taxes in that everyone would receive a monthly “prebate” to cover the tax on the basic necessities of life. So the poor would pay little or no tax.
Currently in Congress as the FairTax Bill (H.R. 25) it does not aim to reduce or increase government spending. The 23% is calculated to keep revenues at their current levels. I love that it is such a simple plan. You keep all the money you earn, and pay tax only when and if you buy something (above the basic necessities of life). No taxes on savings or investment earnings. No more loopholes for the rich. No more tax evasion for “under-the-table” payments. Even drug lords and criminals will pay their tax when they spend their loot. No corporate taxes – thus bringing back businesses and jobs to the U.S. The authors propose that once the current embedded taxes on all goods and services are abolished, actual retail prices will decline, so adding on the FairTax will not make prices much different than what you are paying now. That part I’m not so sure about, but we’d still be getting our entire paychecks plus the “prebate,” so it would at least even out. The only real problem that I see with this plan is that it is just too good to be true! I guess there is another problem, and that would be getting it through Congress. So read the book, go to www.fairtax.org, write your Congressman, and get involved!