Is the U.S. ready for a national sales tax to replace the current income tax?
Yes! It's time to change the way the U.S. funds the Federal Government. It's time to switch from tax on income to tax on consumption. The idea of consumption tax is called the Fair Tax.
This system of taxation would raise the same amount of revenue for the government as our current income tax system, but would be less intrusive, abusive, frustrating, less difficult to understand and more efficient at raising revenues.
Consumers will pay 23% sales tax when they buy a new product. There is no tax on a used or previously owned item. This concept will help recycle products because people will want to save money on items such as cars and homes.
If the Fair Tax is passed and signed into law, it will replace all other taxes and make it more understandable to each U.S. citizen exactly what their tax obligation is and know when they are paying for it. The Fair Tax is levied only once at the retail cash register, which will reduce a lot of hassle and stress for Americans.
This plan will also send every family in America a prebate (an advanced rebate) to cover taxes on the basic necessities depending on the size of the family and the national poverty level. This will help out many Americans who are having difficulty providing these necessities for their families.
Low income and middle class Americans would be better off because families would receive their whole paycheck back and then can decide how much they will spend on taxes by purchases. They also wouldn't have any tax liability.
On the government's part, they will be able to deal effectively with tax evasion, the underground economy, the shadow economy, and those with offshore financial accounts. If you add up the cost in tax revenues, our government runs into the hundreds of billions of dollars. Imagine what that alone is going to do for out economy each year.
When the income tax negatively affects people, they come up with schemes for tax evasion. While criminals, drug dealers, money launders, and prostitutes, are among the most noted tax evaders, the reality of our current system encourages ordinary taxpayers to evade taxes as well. Any time a maid, gardner, repairman, or painter is paid in cash, we are aiding in tax evasion. When you ass the "underground economy", which is the world of illegal activities, the size of the problem becomes clear. Criminals would have to pay taxes every time they spent money on personal consumption.
The current tax code is responsible for driving trillions of dollars into offshore financial centers. This money is sheltered form any participation in the American economy. It's troublesome that one-third of the wealth of U.S. individuals is offshore. If we just brought that money back into the U.S., we would see a tremendous difference in our economy.
Several economists have predicted that is the Fair Tax becomes law, the economy will grow at 10.5% per year. Exports will grow by 26%. Capital spending will increase by more than 70%. The same economists also predict a decline in interest rates by as much as 30%. If you combine the speculative growth and the approximate 11 trillion dollars in offshore accounts come back to U.S. financial institutes, the majority of these funds will end up in the U.S. markets, which will vastly increase the value of the stock and bond market.
In summary, the Fair tax system is a reasonable alternative and would end the annual stress of income tax returns. It will make America's tax code voluntary; it will replace the incomprehensible tax code with one simple sales tax; it will protect lower income Americans by reimbursing them the amount taxed on basic necessities; it will eliminate billions of dollars in taxes which most Americans don't even realize they are paying, and it will bring offshore corporate dollars into the U.S. economy.
An important question is how do we as Americans make sure the Fair Tax Plan in implemented? There are many Senators and Congressmen who support the Fair Tax proposal, but are holding back to see if citizens would support it. When it come to politics, all it takes is a little momentum, and them, the issue becomes a national issue.
With our economy down, employment down, inflation of food and gas prices skyrocketing, and the Presidential election coming up, with one of whoms answer to the economy is to increase income taxes, hopefully both candidates will take a good look at the Fair Tax.
www.fairtax.org
