Nov. 18, 2007 - The FairTax Works for You and Me
The FairTax Works for You and Me
What is the FairTax and how will it affect me? With FairTax proponent Mike Huckabee’s continued rise in the Iowa and national GOP polls, voters are asking this question all over America. Many have heard Huckabee say, “I want to be the President of the United States that nails the going-out-of-business sign on the Internal Revenue Service and ends a $10-billion-a-year nightmare called the IRS.”
Chuckles aside, this is exactly what FairTax supporters aim to do. Simply put, the FairTax will repeal the Internal Revenue Code for individual and corporate income taxes as well as payroll taxes, and replace all of these with a national sales tax. Utilizing the sales tax collection and enforcement system already in place in forty-five states, the FairTax will abolish the IRS.
The FairTax lives up to its name by taxing every individual at the same rate without any exemptions or exclusions. Tax is simply collected from consumers at the time of the sale on new products and services. Savings and investments are never taxed and double taxation is a thing of the past. Used goods are not taxed since they have already been taxed once.
What about low-income families, you say? Under the FairTax system, every family in America receives a ‘prebate’ check equivalent to the amount of sales tax they would pay up to the established poverty level. Social security numbers are used to ensure that each family’s prebate is paid accurately. Retailers do not have to establish who is and is not at the poverty level at the point of sale.
Won’t the price of new goods and services sky-rocket with the national sales tax added on? Currently, all products and services have some degree of income taxes and payroll taxes built into their price structure. Once businesses adjust their prices to reflect corporate and payroll tax savings, base prices will go down, especially on labor-intensive products. The new National Sales tax is added after new lower prices are set. And to top it off, interest rates will fall because lenders will no longer have to cover their tax costs.
Wouldn’t you love to stop stressing over your annual income tax preparation? Wouldn’t you like to bring home your paycheck before payroll tax deductions? How about accessing the cash in your IRA without income tax ramifications? Or invest in the stock market without capital gain tax considerations? The FairTax system is simple. It will work for America. And it will work for you and me.
To learn more about the FairTax system, click here.
by Sallie Hagen, a recently retired Certified Public Accountant, whose practice formerly specialized in Individual and Small Business Income Taxes.
© Sallie H., 2007. All rights reserved.
