My FAIRTAX Story_Paul Wizikowski

The FairTax plan simply makes sense for America. It replaces all income taxes at the federal level with a simple, transparent and fair tax on consumption. It is our single best chance to turn our economy around and move our country away from the brink of economical destruction. Give a listen as Paul Wizikowski tells his FairTax story:

 

 
What’s your FairTax sotry?

Questions about the FairTax plan

Today we continue to address some of the more common misinformation and misconceptions regarding the FairTax plan. Where does all this misinformation come from and why do people continue to spread it without confirmation or even question? Perhaps the real question should be why would anyone want to continue to disseminate erroneous information when it can be so easily checked out.

“The Fair Tax eliminates various government services, Social Security, Medicare, Unemployment, etc.”

The FairTax plan has nothing to do with government services. Not only does it not eliminate Social Security, Medicare, Unemployment, etc. or any other of our current entitlement programs it does in fact fully fund these programs. The only thing that changes under the FairTax plan is the manner in which federal taxes are collected. Instead of paying taxes on every dollar we earn, we pay taxes on the dollars we spend. The FairTax is intended to be revenue neutral, meaning that it simply replaces dollar for dollar our current federal tax revenue. It just does it in a simple, fair and transparent manner.

So, under the FairTax plan Granny keeps getting her Social Security check every month and she continues to enjoy the protection of Medicare. The only change most of us will see is that we no longer have to spend hours or days preparing our income tax return because, whoops, there is no tax on income. We no longer have to save every receipt in hopes of a tax deduction. Our accountant is free to actually help us plan our financial future rather than spending most of their highly paid time on tax preparation. And, April 15 becomes just another beautiful Spring day.

“Anyone near a Canadian or Mexican border will go there to buy everything.”

This is commonly known as the “Over the border” argument.

The prices we are currently paying for goods and services include approximately 22% in embedded taxes. These are the income taxes that must be paid by every hand that touches these products and services from the producer to the consumer. Under the FairTax plan these embedded taxes no longer exist so the cost of production drops by approximately 22%. Then, the FairTax, of 23%, is added at the final retail consumer level bringing the cost of the product or service back to its original price. If the prices are going to remain virtually the same why would anyone race across the border to purchase goods and services? And, if they would, why aren’t they doing it now?

“People will take all their money out of the country.”

Again, this logic is assbackwards. People and companies have taken their money out of the country because of our current income tax system. There are billions, probably trillions, of dollars belonging to American citizens and companies sitting in banks all over the world because under our current system it would be worth half or less simply by bringing it back into the country. Under the FairTax plan there would be no tax or penalty on that money until and unless it is spent at the retail level. So, our citizens and our companies would instead race to bring it back into America and put it to work creating jobs and earning even more money.

“50 million tourists can’t spend enough to support 300 million citizens.”

Arguably, the greatest benefit of the FairTax plan is that it increases the tax base. The fact that millions of tourists will be contributing to our federal tax coffers is a bonus in increasing that tax base. Tourist spending is not intended to replace taxpayer contributions, but to add to it. By increasing the number of people paying taxes the tax burden is spread more evenly and lightly upon all, like a fine layer of smooth peanut butter on bread.

“If new homes are taxed but exisiting homes are not, people will stop buying and building new homes.”

An obvious assumption but a little research shows why this would not happen. Yes, the FairTax will be added to the final price of a new home. But, remember that the FairTax eliminates all the embedded taxes associated with the production of that home. And, existing home prices still contain those embedded tax costs. Take this combined with the fact that under the FairTax capital gains taxes are no longer a concern when selling a home, and that the dollars used to purchase a home have not been previously taxed and there is actually no incentive to buy an existing home rather than a new one. And finally, there is a finite number of existing homes. As people are better enabled to save the down payment and more people move toward home ownership the supply of existing homes will naturally decrease and as new homes are more affordable due to the lack of embedded taxes there will be an equilibrium reached between the two.

One final thought: Change is a fearful thing and the idea of the FairTax plan seems like a big change. In reality, it’s not. It merely changes the manner in which we pay and collect taxes. Those who truly should, and do, fear the FairTax plan are those in political power. The FairTax plan returns the power and control to the people of this country. Let us not forget that less than a hundred years ago we had no tax on income in this country. The income tax is a relatively modern innovation that simply does not work. It provides for government bureaucracies to control the purse strings of the nation, and thus to control the people. The FairTax plan reverses this situation and places the power of the purse with the people.

Cordially yours,

Tim

Answers to FairTax Questions

There are a lot of misconceptions and misunderstandings regarding the FairTax plan. In this article we’ll try to address some of the more common ones.

Is Healthcare taxed? Are mortgages taxed? Is food and water taxed?

Yes, products and services are taxed, but only at the retail level. All the embedded taxes that we are currently paying are removed from the system under the FairTax plan. Rather than prices increasing it is estimated that they will remain at about the same level because the taxes currently being collected by each member of the supply chain no longer exist.

How does the prebate work?

The prebate insures that no one pays any taxes on spending up to the poverty level. Meaning if poverty level income for a family of four is $22,000 then they will be ‘pre-imbursed’ for the taxes they will pay on spending up to that amount. Now, instead of simply not having to pay income taxes they also do not have Social Security, unemployment, and all the other withholding taxes subtracted from their paychecks before they ever see them.

Will we lose the Mortgage Interest Deduction?

The Mortgage Interest Deduction is an income tax deduction, but under the FairTax plan you’re no longer paying taxes on income so there’s no need for a deduction. Additionally, the FairTax only taxes newly constructed homes. Pre-existing home sales are not taxed. And additionally again, when you purchase a home under the current system your dollars have already been taxed. Under the FairTax plan you will receive all of your paycheck up front enabling you to save a bigger down payment in a shorter amount of time, and thus reducing your mortgage payment.

People will just stop spending and there will be no tax revenue.

People will not stop spending. In fact, when we compare our Personal Consumption Expenditures to our Adjusted Gross Income we discover that spending is a much more consistent and reliable measure. When times are good, people spend. When times are tough, people spend. Those of us living paycheck to paycheck may cut back on our discretionary spending, but those who have money continue to spend and some even increase their spending when there are bargains to be had.

What else is in the FairTax?

Lots of things but here’s one more thing to consider. There are millions of tourists and visitors who come to our country every year. Under the present system they contribute nothing in the way of federal revenue, but under the FairTax plan every dollar they spend will be a donation to our federal tax coffers.

Read the Bill (H.R. 25); read the books. Educate yourself. Passing and implementing the FairTax plan could, in one fell swoop, correct the direction of this country and remedy many of our growing problems. It’s fair, transparent, and simple. It’s everything our government doesn’t want so it’s up to us to understand it and insist upon its passage.

For more information and answers to questions about the FairTax plan visit www.FairTax.org.

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?