Transitioning from Income Tax to FairTax

What will tax season be like for the average Joe or Jolene? Well, to begin with April 15 will be just another beautiful Spring day. There will be no income tax filing, so there will be no tax preparation. There will be no need to keep all your receipts. You’ll never again have to ask, “How many years do I have to keep all this stuff?” Your accountant will be able to actually earn his fees by helping you manage your money, rather than by doing your taxes. In short, there will be no tax season.

The transition from an income tax to the FairTax, for the average consumer, will hardly be noticed. The collection of the tax revenue lies with the retail and service businesses, and most of the infrastructure is already in place for collecting sales taxes. The prices of goods and services will remain about the same, and in some cases may even decline as embedded taxes are removed from the manufacturing, transportation and supply processes.

Every year we lose billions of dollars in productivity just in the time it takes us to prepare and file our tax returns. This is an immediate benefit of implementing the FairTax. Will it be easy to get it done? No. Is it worth it? Absolutely.

Reliable Source of Tax Revenue – Consumption vs Income

One question that first concerned me about the FairTax was what happens when people reduce their spending? Since the FairTax is collected on retail sales and services would it generate enough revenue to keep the federal government running when people cut back on their spending during tougher economic times? What I learned in educating myself regarding the FairTax is that spending is actually a more reliable source of revenue for the federal government than is income.

During good economic times lots of people have jobs and everyone spends. But, when times get tough fewer people have jobs. Those who lose their job or are downsized pay less or no income taxes. However, everyone still spends even if they are spending less. And, by collecting the tax at the point of retail sales and service those visiting the U.S. from other countries are contributing to its tax base.

Our Country is in the midst of some pretty turbulent economic times, and the answer from many in Washington is simply to raise income taxes on U.S. citizens. But, imagine what would happen if every visitor to our Country were also paying taxes, every undocumented worker were paying taxes, every person in underground economies was paying taxes with each purchase. The FairTax is not about reducing tax revenue, or even reducing taxes. It’s about spreading the tax base fairly and evenly, and making our tax system transparent and responsible.

The common refrain for several years has been, “It’s a good idea, but it will never happen.” The FairTax is a good idea, and it’s an idea whose time has come. Please investigate the idea of the FairTax. If it makes sense to you, educate yourself on the legislative bill, H.R. 25. And finally, take steps to help effectuate its passage into law. It can happen; it will happen, but will it happen in time to arrest the crumbling of our republic?

How much will the FairTax be?

So, just how much will the FairTax be? The estimated percentage rate of the FairTax is 23% as an inclusive tax, and 30% as an exclusive tax. What’s the difference, you ask? That’s a very good question, and one that I think our good friend Denis Calabrese can answer better than I. Please give a listen to the short video below and it will all become clear.

Exemptions and Exclusions under the FairTax

What’s going to keep tax exemptions and exclusions from undermining the FairTax system?

That’s a fair question. The goal of the FairTax system is to tax everyone fairly. The same tax will apply to everyone and the few exemptions and exclusions that are written into the bill will apply to everyone, as well. Because of this transparency any attempt to tinker with the tax code will also effect everyone. Lawmakers will no longer be able to use the tax code to divide and conquer the people of this country by excluding or exempting certain groups from paying certain taxes, or heaping additional taxes onto specific groups. Because the tax is collected at the retail level at the point of consumption it applies across the board and the power to manipulate the code, and thus the people, simply goes away. Will it be possible for politicians to tinker with the FairTax? Only if we, as a people, let them.

Would FairTax tax Education?

Investments and savings will not be taxed under the FairTax system. Since education is clearly an investment in a person’s future, it will not be a taxable item under the FairTax.

If you didn’t have to pay taxes on your money when you earned it, and you didn’t have to pay taxes on money invested in education, how inclined would you be to finally finish that degree or how much more determined would you be to see that your child gets a quality education?

Would FairTax tax services?

One point of confusion on the FairTax is that it will tax services that are not currently taxed. The truth is that consumers are already paying taxes when they pay for services. The income and payroll taxes that businesses are required to pay are included in the fees they charge for their services. The difference under the FairTax will be that the consumer will know exactly how much of the fee they pay is going to pay taxes and how much is actually going to the company they are patronizing.

Transparency in our tax system is something we have never known, but I think we could get used to it. If you don’t like it we can always hand the power back over to the politicians.

FairTax Plan is Straight Up American

Like so many others I try my hardest to keep up with the important issues and current events of the day. But, with all the demands that work, family and community place on our time it’s near to impossible to actually keep up. I sometimes suspect that we are all too busy to remain fully informed by design, but that’s a political conspiracy theory I’ll save for another day.

I’ve come to realize, though, that by trying to keep up with every issue I am not truly keeping up with any. While I may be somewhat familiar with the issues surrounding border security and immigration, terrorism and terrorists, tax reform, the economy, the environment, our health, our military conflicts, education, the oil spill in the gulf, and the ongoing tragedy of Lindsay Lohan, just to name a few, I can not hope to become and remain fully informed on all of them. So, what’s a voter to do?

I have decided that for the time being and for the foreseeable future I’m going to pick one as my primary issue. I’ll still follow the other important issues, of course, but my primary issue will be my focus. And, this primary issue is going to be tax reform, or more specifically the FairTax.

The November elections will soon be upon us and all the candidates will march about saying all the things they think we want to hear. Their position on most issues is predictable. No candidate is going to come out against border security, or for terrorism. Their positions on most issues will differ only by degrees and approach.

But, the issue of the FairTax is a line in the sand. The FairTax specifically proposes the abolishment of the federal income tax, and its replacement with a national consumption tax. American citizens, tourists, immigrants, anyone who spends money in America at the retail level will contribute to our national coffers. We determine how much tax we pay by how much we spend, and everyone pays the same percentage amount. The government’s ability to control the Country by manipulating the tax code goes away. And, any political candidate who supports handing the reins of the Country back over to the citizens of the Country by passing and enacting the FairTax is worthy of serious consideration.

I chose this as my primary issue because I am convinced that passing the FairTax plan is the single most important step we can take in preserving this republic of the United States of America. Our politicians and our government have become corrupt beyond reason and they will not correct themselves. Only by forcing them to relinquish their power to manipulate the flow of money can we hope to find equilibrium.

This is not to say that the other issues we face are not equally important, but I believe the FairTax is our best chance of returning our Country to prosperity through government by the people.

So, in the coming months we will be looking more closely at the FairTax plan and how it is meant to work. We will also look into the political candidates who support it or don’t support, as well as those who merely claim to support it as a bid for your vote.

If you want to learn more about the FairTax I urge you to visit the Americans for Fair Taxation Web site at www.FairTax.org.

Send a FairTax Tea Bag to Washington

Send this tea bag to Washington
Send this tea bag to Washington

There has been a lot of noise made recently about sending tea bags to Washington to express our growing concerns about unfair and exorbitant taxes. While I think this is a great idea in theory it is not very practical. For one thing the  tea bags will likely not get past the security measures at the Post Office, and for another you would be paying yet another tax in the form of postage to get it there.

Here is the next best thing to inundating our elected officials with an office full of tea bags. Inundate their inboxes with thousands of images of tea bags.  Be sure and include a message regarding your concerns about our tax system. Be respectful, as you would to your neighbor, but not submissive. They need to understand how you feel.

You can find contact links to your elected officials, both Federal and State, by going to the Congress.org web site. Just type in your zip code and you’re off.

For your convenience here is my favorite tea bag image. Feel free to use it or find your own favorite. You can find lots of tea bag images here.

Supporting your government is a duty; taxation is a burden; excessive taxation is tyranny.  Let Freedom Ring.

Sincerely,

Tim Couch

the Guys

I took my truck in to have some service work done this morning. After dropping it off I walked down to the local McDonald’s for breakfast. Just as I was finishing off a second McMuffin my phone rang, and as these things go my one hour service job suddenly became a three hour repair job. As I had some time on my hands I took the opportunity to do a little people watching.

I had taken up temporary residence in a quiet corner of the restaurant where I had a pretty good view of the action. I watched as the customers came and went. I observed the bustle behind the counter as the employees went about their business. It was all pretty ordinary fare for a Friday morning McDonald’s, even down to the “Guys.”

The Guys are as much a staple of McDonald’s as is Ronald. No matter where in the world you go to a McDonald’s restaurant, during a particular part of the day, most every day of the week you will find, the Guys. They are a group of men, usually retired but not always, who gather over cups of steaming coffee for discussion. They sit and sip coffee and discuss current events and politics and philosophy and girls and cars and physical ailments and absent friends and whatever else comes up. And, at some point someone will approach their table and with genuine cheer they will say, “Hi Guys!”

But, there was something different about the Guys this morning. Maybe it was the way they were positioned around the table that made it look more like a Board meeting than a gathering of the Guys. Perhaps it was their obvious ease with their surroundings that made them seem somehow, authoritative. I watched them, these silver haired elders, as they discussed the current topic with energy and animation. It occurred to me that if you replaced the baseball caps and the denim and fleece and flannel and tennis shoes with expensive suits, shirts, ties, and dress shoes, and then if you plucked these men from their seats and deposited them around a conference table in a swank office they would look exactly like the men of Congress and other politicians that we see on television.

And why couldn’t they be? What’s the difference between these men sitting around a table at McDonald’s, and the men and women on Capitol Hill whom we entrust to make decisions that effect our lives and the lives of our children? Is it intelligence? I don’t think so. This Country is swarming with intelligent people, and our politicians have not proven to be exceptionally intelligent or insightful. Is it wealth? Some of the wealthiest have tried and couldn’t get elected. The only difference between the Guys at McDonald’s and the Guys on the Hill is connections. Those with the connections get the votes.

So, why do we entrust them with our lives? The Guys at McDonald’s looked like a smart upstanding group of men, but I wouldn’t entrust them with my life or the future of my children. And yet, that’s exactly what we do with the Guys on the Hill every day. We elect ’em and forget ’em, and then if our lives aren’t better when the next election cycle comes around we elect someone else who promises change. The change we need is not going to come from government or occur within government. The change is going to have to come from us. Ideas, Solutions, Insistence; that is the change we need.

The time is come to pay attention, to step up, and to make your voice heard. Stop looking to government for the answers. Government doesn’t hold the answers; government holds the purse strings, and as long as it does you are at its mercy. Learn about the FairTax plan. It returns control of your money to you. It’s our best hope of restoring sanity to our government. And, it will only happen when enough people rise up and demand it.

Sincerely,

Tim Couch

Video of FairTax debate in Congress

The ‘Special Order’ non-legislative debate on the FairTax plan hosted by Iowan Congressman Steve King marked a milestone moment in the FairTax movement. The bill (HR 25, S 296) now has fifty-one co-sponsors from both sides of the political aisle in Washington, more co-sponsors than ever before. This is a grass-roots movement with legs that will eventually become law. The only question that still exists is how much damage will the politicians do before the people insist on the passage of this bill.

The full video of the ‘Special Order’ debate is below. The first few minutes will give you a good idea of what the FairTax is about. Give it a listen. It’s good stuff.