Fair Tax could save economic system

    As you no-doubt already know, this year is going to be vital as far as congressional elections go.  Many seats are up for grabs which, in turn, may give Democrats control of congress, which they haven’t had in 12 years.  One of the most watched elections is taking place in Georgia, between republican Mac Collins and democrat Jim Marshall.  It is so watched, that President Bush visited Macon to help Mac Collins with his campaign.    Over the past few weeks, the smear ads between the two candidates have been in full swing.  In one of these ads, Jim Marshall accuses Mac Collins of wanting to impose a 23 percent national sales tax which would raise taxes.   Now, while it is true that Mac Collins does support this sales tax, it is not true that it would raise taxes in anyway.  However, Jim Marshall is hoping that constituents do not know this.  He, like most democrats, wants the voters to be ignorant about issues.
    The tax system that Mac Collins supports is called the FairTax.  The FairTax was created by Georgia Congressman John Linder and is a replacement for our current lengthy and complex income tax system.  In the FairTax bill, all income taxes, payroll taxes and death taxes are repealed and replaced by an inclusive 23 percent retail sales tax.
    First, what must be noted is that prices would not increase.  When you buy an item at the grocery store, you are paying not only the cost it took to make that product, but  also the taxes of the workers and the business who helped make that product.  This is because businesses list taxes as expenditures, which are then added to the final sale price of a product.  So with income taxes, payroll taxes, and other taxes that businesses have to pay out of the picture, the business has to pay less expenditures, thus allowing the price of its product to fall.  It is estimated that as a result, prices of products would fall by roughly 22 cents on the dollar, which is roughly equivalent to the sales tax that would be imposed.
    This tax is also progressive and fair.  Under the FairTax, the more you spend, the more taxes you pay.  Logically, you can assume that richer families, being more likely to consume products than a poorer family, will pay a majority of the taxes. Also, the FairTax provides for a refund check to be sent to every head of a household each month to pay for necessities of life like food.   This refund check is based on the poverty level for the amount of people in a household.  For example, a four person household would receive roughly $300 to spend on food or whatever else they deem necessary.
    Of course there is more to the FairTax.  The business and economic growth as a result of the FairTax would be phenomenal. However, the statistics and benefits of this tax system above our communistic income tax is too much to fit into this small article.  For more information, I encourage you to read "The FairTax" by Neal Boortz and John Linder, which can be found at any bookstore.

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Posted by Colonnade Archives on Nov 3 2006. Filed under Opinion. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry