The current income tax code is nearly 8,000 pages and cannot be understood by the average citizen. It is a complex maze of regulations that have been piled on one another for decades. It is time to revolutionize the way the federal government is funded. A flat income tax, a value-added sales tax and an embedded sales tax (“FairTax”) have been researched and offered up over the past couple of decades. Any one of these would be a better alternative to the current income tax, but my choice is the FairTax. The details about the FairTax can be found at www.fairtax.org and a brief overview from that site is presented here:
What is the FairTax plan?
The FairTax 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 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 FairTax Act (HR 25, S 1025) 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 FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
The FairTax:
- Enables workers to keep their entire paychecks
- Enables retirees to keep their entire pensions
- Refunds in advance the tax on purchases of basic necessities
- Allows American products to compete fairly
- Brings transparency and accountability to tax policy
- Ensures Social Security and Medicare funding
- Closes all loopholes and brings fairness to taxation
- Abolishes the IRS
My proposed changes in the federal budget (see #8 Living Within a Budget) reduces federal spending and ties it directly to the revenue produced from the FairTax. This should make the FairTax rate significantly less than the 23% set in the current legislative bill.