Monday, April 17, 2006

The Fair Tax

Once a year we're all reminded how crazy our system of taxation is. There is an alternative: support the FairTax. The FairTax is a national retail sales tax that would replace federal income and payroll taxes (including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes).

The FairTax proposal features dollar-for-dollar revenue replacement, and a rebate to ensure that no American pays such federal taxes up to the poverty level. The FairTax allows Americans to keep 100% of their paychecks, eliminates compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.

Importantly, the FairTax does not burden U.S. exports the way the current income tax system does. It removes the cost of corporate taxes and compliance costs from the cost of U.S. exports, putting U.S. exports on a level playing field with foreign competitors. Lower prices will increase demand for U.S. exports, and increase job creation in U.S. manufacturing sectors. Imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries' value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match.

Our wasteful and corrupt Federal government likes the current tax mess because it hides constant tax increases in many places. The current system also siphons billions of dollars from citizens and companies to tax preparation services, accountants and tax lawyers. The FairTax can end the madness.