The Best Stimulus Package
The President and the new Congress seem to be seriously considering a stimulus package to “jump-start” the economy, which could approach $1,000,000,000,000 – that’s a TRILLION $s! Of course this is just returning our own tax dollars in the hope that we will go out and buy, buy, buy!
As usual our Washington politicians have completely overlooked the BEST plan that has been in committee for several years. It is HR25/S296, THE FAIR TAX ACT (FTA). With the stroke of his pen, the President could solve all of our economic problems if the Congress would just send him this proposed legislation.
Why do I believe the passage of the FTA would work this miracle and put our workers back to work and save the economy? First and foremost this legislation would eliminate ALL federal taxes and give every worker 100% of what they earn. Next it would eliminate the necessity for an Internal Revenue Service, which by itself would save millions of dollars for the federal government.
The FTA would create jobs, where the current system destroys jobs, by stripping out the hidden taxes and compliance costs of every business. It is estimated that, on the average, the retail cost of products and services would be reduced by 25%. Also it would make U.S. goods more competitive overseas and more affordable at home, thereby sharply increasing job creation while sharply reducing our balance of payments deficit!
As mentioned above, Americans would receive their whole paycheck…no federal withholding for federal taxes, social security tax or Medicare tax. What one earns one keeps! Social Security taxes are the most regressive tax of all, but the FTA will ensure that the system will fulfill the promise to one generation without being a burden on the next.
Lower and middle-income taxpayers will have a dramatic decrease in their effective tax rate. In fact a rebate will be received each month for ALL households based on the federal poverty income levels, This will allow families to save more and faster for home ownership, education and retirement. It will also allow homeowners to pay their entire house payment with pretax dollars, which will be a great improvement over the current home interest deduction.
For both businesses and individuals it will free up time wasted on filling out cumbersome and inscrutable IRS forms, which will save $250 billion or more.
The FTA is revenue neutral, which will raise the same amount of revenue for the federal government. Since anyone who makes a purchase at the retail level will pay the federal sales tax they will be paying their fair share based on their standard of living and income. No one will “escape “ or be able to use “loopholes” (since there aren’t any) to prevent paying taxes. Here is how the FTA works:
The act will impose a federal sales tax (just like many states) of 23% at the cash register. As pointed out above, eliminating the “hidden federal taxes” on the production of goods, the retail price of purchases will be reduced about 25%. Think of it this way: If a loaf of bread today cost $3.00 (forget any state sales tax) and the FTA will reduce the costs by 25%, the new retail price of the loaf of bread would be $2.25. Now add just the federal sales tax of 23% to this and the loaf will cost $2.76 – a savings of 24 cents or 8.0%. Apply this to any retail purchase – a new car, a new home, new clothes, etc. Note that I say NEW since any USED goods will NOT be subject to the federal sales tax.
To ensure no American pays tax on necessities, the FTA plan provides a prepaid, monthly rebate for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This is how the Fair Tax completely un-taxes the poor, lowering the tax burden on most, while making the overall rate progressive, based on lifestyle/spending choices rather than simply punishing those taxpayers who are successful.
For example, based on the 2007annual poverty level of a household of four of $20,650, this household would receive a monthly rebate from the federal government of $395.79. This will replace the 23% federal sales tax this household will spend on their necessities each month. A single individual would receive $195.69 rebate each month, while a married couple would receive $262.39. Remember that this applies to every household regardless of their income – wealthy and poor alike!
The FAIR TAX time has come, and it is up to you and me to insist that our representatives in Washington get HR25/S25 out of committee onto the floor of the Congress for a VOTE – up or down – to see if they really do have our best interest at heart. The FTA can be set in motion almost immediately with a Constitutional Amendment shortly behind it.
All of the above information comes mostly from AMERICANS FOR FAIR TAXATION, and you can find all you really need to know at www.fairtax.org, or you can find a complete copy of the act at the Library of Congress and download a copy of the Act.
LET’S MAKE APRIL 15TH JUST ANOTHER DAY!
James B. Plair
68 College View Court
Brevard, NC 28712