Friday, June 5, 2009

FairTax, anyone?

I just finished reading The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS by Neal Boortz and John Linder. My brother actually lent it to me months ago and I finally got around to reading it this morning.

At the time he lent me the book, we were in a heated discussion as to whether the Federal government or the State governments needed more (or less) power compared to each other and which should have more responsibility. Honestly, I can't remember how the discussion even started. I believe we were talking about Nationalized health care or something to that effect and we kind of trailed off...

Back to the book, though. I chewed through it pretty quickly. I did find that there was some repetition in the writing which kind of made it a little bit annoying to read in spots, but I understood the need to drive certain concepts home by repeating them.

The main purpose of the book was to explain the FairTax plan of taxation compared to the current web of taxes we're currently paying here in America. FairTax is a consumption tax on all goods and services in place of every other Federal tax that we currently pay. This would mean no more income tax or payroll deductions for Medicare/Medicaid or Social Security. Instead you pay tax when you purchase something new in a retail environment or you are buying a service.

The plan was created to provide the same level of revenue to the government but in a much more simple (but harder to evade) system.

A few of the benefits of this system are:

  • the ability to take home your whole paycheck

  • the end of the IRS and complicated tax code

  • everyone who buys a good or service in America pays into the system (including tourists and people who, through usage of the current tax code, have managed to avoid paying taxes but still benefit from living in or visiting America)

  • a "prebate" offsets the amount every individual would be taxed up to the poverty level of consumption (doesn't hurt the poor)

  • should (if all of the theories pan out) help lower costs of products and services by eliminating all of the "hidden taxes" that are passed along from companies through products and services - which, even with the added FairTax, should allow the price of things to stay close to the same as they were before the tax

  • doesn't tax ANYTHING used/pre-owned which would provide a slight incentive to purchase pre-owned products where possible (better for the environment?)

It sounds almost too good to be true... but I still haven't managed to put any big holes in it.

Anyone out there as interested in this as I am?

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