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8 things that we could change about Tax Day forever

Opinion8 things that we could change about Tax Day forever

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April 15 has just passed. Most of us are taking a breather. It doesn’t have to be this way. The FairTax Act which has been before Congress for 25 years would fund the government with no extra effort from any of us than just paying a sales tax whenever we buy new goods or services. No one would ever have to know what we pay or when we pay. 

What else would happen? 

1. The economy would explode. Trillions of dollars offshore would be repatriated, because there would be no tax event in doing so. A study shows that capital spending in the first year after passing the FairTax would increase 70%. That increases productivity, and it is estimated that the GDP would grow in the first year by 10%. That begins to save Social Security and Medicare. Additionally, the ceiling on contributions to those programs disappears and illegal immigrants and the underground economy pay into the system. 

THE TAXING TRUTH: A STATE-BY-STATE ANALYSIS OF TAX-TIME TRICKERY

2. Manufacturing would return to the U.S. Former Ways and Means Committee Chairman Bill Archer often quoted an informal study of a large number of international businesses that are headquartered overseas.  

TAX FORM

A mere look at IRS forms can make most Americans stress out. It doesn’t have to be that way. The FairTax could take back Tax Day. (Kurt “CyberGuy” Knutsson)

When asked what they would do in their long-term planning if we eliminated all taxes on capital and labor and taxed only personal consumption, 80% said they would build their next plant in the U.S. Twenty percent said they would relocate their headquarters to the U.S. And it is totally border-neutral, which would improve our exports as well as make us more competitive with imports whose taxes have been rebated. 

3. Every family that is legally resident in the U.S. would receive a monthly cash advance — a prebate — that would totally cover the tax costs of spending up to the poverty line for that family. Poverty level spending is defined each year by the government to be that spending necessary to buy essentials. The prebate for a family of four would cover the tax costs on spending of $40,880. That would totally untax the poor and in addition, prices would fall dramatically. A Harvard study determined that the embedded cost of the IRS at retail is on average 22% of the price.  

(Example: It takes hundreds of companies to bring a loaf of bread to your table. Oil companies, refineries, ore companies, steel companies, tractor and truck manufacturers, distributors, farmers, grain companies, bakeries, plastic companies and retail stores are all involved. Each of them has labor costs, operating costs, rent and tax costs. The only mechanism available for any business to pay a bill is the price. And the only taxpayer in the world is the consumer who consumes the product and all the embedded costs.) Let’s quit lying to the public. Stop pretending that businesses pay taxes and tax the consumer honestly and openly. 

4. We would, for the first time ever, tax wealth instead of wages. (For those worried that the rich won’t pay their fair share, I note that all wealth is ultimately consumed. If not by the earner, then by the heirs. Even money contributed to charities is ultimately consumed and would be taxed.)  And if billionaire Elon Musk wants to move to a farm and grow his groceries and never pay taxes, we won’t care. We would borrow his money and create jobs with it. 

5. Businesses would make business decisions based on what is best for their shareholders, employees and customers, not what is best for their tax burden. 

6. We would tax the underground economy which, 15 years ago, was estimated at $3 trillion a year. Illegal immigrants would also pay their fair share. 

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7. We would save Americans nearly $1 trillion spent each year on IRS paperwork.  

8. Churches would be able to conduct themselves as they see fit without IRS agents listening to their sermons. In 1954, Lyndon Johnson passed an amendment to the tax code that prevented 501(c)(3) organizations from endorsing political candidates. It was aimed mainly at churches and during the abuses of the IRS during the Obama administration, government agents did in fact attend some churches to monitor sermons. 

Every family that is legally resident in the U.S. would receive a monthly cash advance — a prebate — that would totally cover the tax costs of spending up to the poverty line for that family. Poverty level spending is defined each year by the government to be that spending necessary to buy essentials. The prebate for a family of four would cover the tax costs on spending of $40,880.

This is not a crazy idea. It has been carefully studied and it works. It is exactly the system in place in Monaco, for example. And billionaires, who have armies of tax experts to game the current code, also spend a lot of money and would pay more than their fair share. 

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We would be told that the FairTax would discourage charitable giving, but the Fricks, the Mellons, and the Carnegies gave away their fortunes before there even was an income tax to deduct from. The wealthy would continue to do so. 

Let us get serious about helping the American people. The FairTax would increase everyone’s purchasing power by lowering prices when the embedded costs are driven out of price, increasing everyone’s take-home pay when all taxes on income are repealed, give everyone peace of mind when the IRS is eliminated, and finally, give to the American people the greatest gift we have to give. Anonymity! No agency of government should know more about us than we are willing to tell our children. 

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