Don McKee
Joining in a tax day rally yesterday in Washington were Senators Johnny Isakson and Saxby Chambliss, Congressmen Tom Price and Phil Gingrey of Georgia and several other supporters of the “FairTax,” notably the presidents of the National Small Business Association and the National Taxpayers Union.
Isakson said “tax simplification is long overdue,” terming the current tax code “burdensome to families” and “a large drain on America’s small businesses.” He cited statistics from the National Federation of Independent Business showing that “small businesses spend between 1.7 billion and 1.8 billion hours a year on tax compliance with a total estimated cost of between $15 billion and $16 billion annually.” That’s a whale of a lot of time used up on complying with the hodge-podge tax code that usually requires a CPA for the smallest business.
Isakson also said the existing tax code “punishes productivity instead of taxing discretionary spending.” He said the FairTax is the way to simplify and clean up the tax code “and create a more simple way to pay your fair share.”
No doubt, it is simpler than the morass of provisions rolled into the current tax code. But to be candid, the method of figuring the “FairTax Act,” Senate Bill 13 or S.13 in the Senate terminology, does not appear to be so simple.
To start with, it would be a 23 percent tax on “the use or consumption in the United States of taxable property or services,” according to S.13. That would be for the first year, 2013 (assuming enactment, a huge assumption). Thereafter, the bill says, “the rate of tax is the combined federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.” That paragraph says “The combined federal tax rate percentage is the sum of (A) the general revenue rate (14.91 percent, according to paragraph 4), (B) the old-age, survivors and disability insurance rate, and (C) the hospital insurance rate.
It’s just a tad confusing to your columnist, trying to figure out what the general revenue rate (whatever that is) and the old-age, survivors and disability insurance and hospital insurance rates have to do with the sales tax. However, the president of the National Small Business Association, Todd McCracken, flatly said in his tax day remarks that the “FairTax would replace the current system with a national 23 percent sales tax.” Further, he said a survey by his association showed a majority of small businesses support the tax plan.
McCracken said neither job creation nor deficit reduction can “be optimized without some kind of meaningful tax reform.” Granted, but the “FairTax” is a long way from gaining congressional approval. Meanwhile, why can’t Congress just close some loopholes and make existing tax cuts permanent?
dmckee9613@aol.com
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For once you and I are in agreement on something.
The Fair Tax does deserve a serious look. It probably needs some refinement, but it is a good start.
However, I find it curious that while you support the Fair Tax which is a "user pays" type of system, when it comes to the TSPLOST tax you want to impose that tax on everyone even though its' touted benefits to the general public are questionable.
HMMMMM?
Not quite the same.
The Fair Tax is being collected "in lieu of" the income tax.
For those of you in Smyrna that means it is REPLACING the income tax we currently pay.
It is not an additional tax.
The TSPLOST tax is an additional tax.
It is NOT replacing, offsetting or otherwise reducing another tax.
It is an additional 16% over and above what we are already paying in sales tax.
The Fair Tax is also, for the most part, voluntary in nature and is collected only once for items you choose to purchase and use.
The TSPLOST, on the other hand, is potentially being forced on up to 49.99% of the taxpayers who may not in favor the tax and is can be collected multiple times on items that are being resold.
The Fair Tax is a VOLUNTARY tax.
The TSPLOST is an INVOLUNTARY forced tax.
Pretty soon, that is all going to add up.
The Fair Tax certainly seems to be a step in that direction.
At the very least, it is something, along with other potential solutions, that needs to be reviewed, refined and considered.
Surely we can come up with something that is better than what we have now.
That's one reason why any tax system based on income will never stay flat and will always turn into a "lobbyists' full employment act."
The FairTax rate is stated as it is because revenue needs may change in future years...hopefully downward. Studies show revenue neutrality the first year requires 14.91% in general revenue and 8.09% to cover replace current payroll tax collections. The rate for all years going forward is subject to change just as the income tax is. The total tax will consist of whatever Congress passes as the general revenue rate plus whatever they pass to cover the benefits currently funded through payroll taxes.
The FairTax is progressive especially with the prebate factored in. Yet it treats all Americans alike and makes the cost of government equally visible to all. It is this equal visibility that hopefully will help us return our legislators to true public servants.
Without the visibility, the tax code will continue to be a full employment act for lobbyists and a vote pandering scheme for Congress. This should be a concern of citizens from all political stripes.
"Granted, but the “FairTax” is a long way from gaining congressional approval. Meanwhile, why can’t Congress just close some loopholes and make existing tax cuts permanent?"
On the Fair Tax--it is a shame that it does not have Congressional approval.
On the loopholes - a shame too.
I suspect that the voters are way ahead of the politicians on this issue.
Gee whiz, it may even put US Bankruptcy off for a few more years.