FairTax (H.R. 25/S. 13)
On April 16, 2009, I had one Tea Party ‘under my belt’ and was ready to move on to another project. The two men who had questioned me about FairTax the day before motivated me to find out what it was about. It didn’t take long for me to jump in with both feet because it dawned on me that this might be the thing that saves our country. Saves it from bankruptcy and saves We the People from the chains of taxation bondage. It was the most exciting thing that everyone, I mean everyone, could get behind. Nobody likes the IRS. Nobody likes the over-60,000-page tax code. Nobody likes April 15. Nobody likes to get audited. I used to think that only rich people trying to get away from paying their share of taxes were audited. Boy, was I wrong! And I was wrong about everyone getting behind the FairTax Act, too. Fred and I were audited in 2004, so when I decided to promote FairTax and abolish the IRS, it became a full-time job.
I met Carol Chouinard when I visited fairtax.org and volunteered my services. Carol called me and we became fast friends. Before long, I would sign on to be a community organizer for District 2 Oklahoma, reporting to the District Director, Carol. With the momentum following the successful Tax Day Tea Party little more than a week earlier, I had scheduled another gathering featuring FairTax on April 25, which was also Australia and New Zealand’s ANZAC Day. By that time, we had an impressive e-mail list of close to 100 members who had signed up on the fifteenth. We notified everyone through email@example.com and placed one small ad in the local paper and ran a couple of free event announcements. Only about twenty-five people showed up to hear our FairTax speaker, Dr. Jeff McIlroy, and enjoy the short program paying tribute to our active-duty troops and veterans and acknowledge the sacrifices of the Australia and New Zealand Army Corps ANZAC. The national holiday is similar to our Memorial Day, celebrated with veterans parades and church services. It commemorates the April 25th landing of the ANZAC troops on the Gallipoli Peninsula in European Turkey during World War I and now includes those who died in both world wars as well as in Korea and Vietnam.
Also included in our April 25th program was a feature of interest to local Miami and Ottawa County residents presented by an area veteran. Newcomers like me were fascinated by the information we heard. I’d often wondered what GAR stood for on the sign at the huge cemetery north of town. I learned it stood for “Grand Army of the Republic.” The veterans cemetery is also the burial place of fifteen British cadets who died while training at the Spartan School of Aeronautics in Miami between 1941 and 1945. The cadets’ graves are side by side and at the end of the row is the grave of Frantie Hill.
Frantie began taking care of the burial plots after noticing that some of them were neglected. She spend the remaining forty years of her life attending to the fallen cadets’ graves as well as maintaining an attachment to their families by exchanging letters and photos. Frantie Hill walked three miles from her home to the cemetery to pull weeds and take care of the burial plots. She planted roses and Irises. Initially the graves were marked with wooden crosses, and the British government later replaced them with granite markers. Frantie Hill died June 4, 1982, at age 91. Several of us later drove out to GAR Cemetery to visit the memorials of the fallen British cadets and Frantie Hill.
Dr. McIlroy held a FairTax question-and-answer session at the end of his presentation. Although I had a general understanding of how FairTax works, getting into the nuts and bolts of the legislation really prepared me to answer questions I myself would be asked.
I would have that opportunity countless times over the next year and a half. At the beginning of my presentations I would read: “The FairTax proposal is a comprehensive plan to replace federal income and payroll taxes, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax proposal integrates such features as a progressive national retail sales tax, dollar-for-dollar revenue replacement, and a rebate to ensure that no American pays such federal taxes up to the poverty level. Included in the FairTax Plan is the repeal of the Sixteenth Amendment to the Constitution. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.”
Many people will immediately shrink at the idea of a 23 percent sales tax until they understand that there is already 20 percent or more of federal taxes imbedded into every product you buy. Someone will always argue with me that the price of new items will never go down, that the new federal tax will just be added on top of what they already pay. And there are those who cannot believe that the IRS will ever go away and who will argue up and down that lawyers and crooks (to be redundant) will always find ways to scam the new system and make matters worse. I don’t see how that can be when 60,000+ pages of tax code would be replaced with a 200-page book.
One of the most effective points I’ve learned to make, and what is readily understood by canny Tea Party members, is that when all punitive taxes are eliminated, the thirteen to fourteen trillion dollars in offshore investments and accounts (nearly matching our national debt) would probably be brought back home by companies/corporations with no reason not to do so. An instant shot in the arm to our economy.
You would think no one would object to receiving a prepaid rebate (prebate) check to every registered household so no American will pay tax on necessities up to the federal poverty level. This, and many other features, is how the FairTax completely untaxes the poor and lowers the tax burden on most, while making the overall rate progressive. The FairTax is progressive based on lifestyle and spending choices, rather than simply punishing those taxpayers who are successful. You’d think people would see how much freer life would be with the FairTax instead of the federal income tax. Unfortunately, some people cannot see beyond the prebate being an opportunity for thievery. An analogy that comes to mind very frequently these days is strain at a gnat and swallow a camel.
With the FairTax you pay no tax on used goods. The amount you pay to fund the government is completely visible. You are taxed once on any good or service. If you choose to buy used goods, be it a car, a home, or an appliance, you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no FairTax which is is also called a consumption tax. Simply put, there is no business-to-business tax. The FairTax is charged just as state sales taxes are charged today. When you decide what to buy and how much to spend, you see exactly how much you are contributing to the government with each purchase.
Retail prices will no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least afford to pay—20 percent or more of all retail prices. According to Dr. Dale Jorgenson, well-known economist of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices for everything we buy. If competition does not allow prices to rise, corporations lower labor costs, again hurting those who can least afford to lose their jobs. Finally, if prices are as high as competition allows and labor costs are as low as practicable, profits and dividends to shareholders are driven down, thereby hurting retirement savings for mom-and-pops and pension funds invested in Corporate America. With the FairTax, the sham of corporate taxation ends, competition drives prices down, more people in America have jobs, and retirement and pension funds see improved performance.
You would think a plan supported and endorsed by eighty independent economists and called “the most thoroughly researched piece of legislation to ever go before Congress” would garner more support from the public. However, there are still a lot of skeptics, and worse, opponents of the FairTax mislead and keep the general public in the dark. Those are the entities that thrive on the current system and will do everything in their power to keep FairTax from becoming a force to be reckoned with.
Democrat talking points vilify the “rich” and stir up anger against republicans for not wanting to raise taxes on anyone during a down economy. Especially the so-called rich who are actually the job creators. The left glosses over the rich who are hurting the economy by living off their wealth. These are the elitists who don’t create jobs, pay no income tax and game the tax code to essentially avoid paying any federal tax at all. With FairTax each time they purchase a new mansion, new yacht, new limo, new clothes and jewelry, anything new, they will pay to fund the government. So, too, will the criminal underground which pays nothing into our federal coffers but cost American tax payers billions and billions to maintain their criminal lifestyle. With FairTax each time they buy something new they will pay federal taxes. When I see criminals wearing their bling and driving Cadillac Escalades I get angered and want to kick some congressional ass for not endorsing FairTax. Twenty-three percent of the price they paid for their expensive trappings could have gone to fund the government
And then there is the myth that the FairTax is just another flat tax. Nothing could be further from the truth. Steve Forbes wrote the Flat Tax Plan, which starts out by scrapping the federal tax code. A good thing, but still based on income. Congressman John Linder of Georgia introduced the bill in 1999, and for over a decade FairTax has not moved out of committee due to Charlie Strangle’s “rangle-hold” on the legislation. (I made up the phrase “Charlie Strangle’s rangle-hold” and used it in one of many on-air commentaries with Andrew Wilkow of the “Wilkow Majority” conservative talk radio show host.) Mr. “Strangle” is no longer chair of the House Ways and Means tax-writing committee. His disgraceful exit coincided with the shellacking his party took in November 2010 and now opens the opportunity for dialogue and debate. Rep. Linder retired and his chief of staff, Rob Woodall, won his congressional seat. Woodall immediately took the torch and led the FairTax movement to the astonishing accomplishment of filing the legislation with more sponsors than ever on the opening day of the legislative session. Forty-seven representatives signed on, on day one and more are following.
Sen. Saxby Chambliss, also of Georgia, introduced S. 13 with five Senate co-sponsors on January 25, 2011: Richard Burr, NC, Tom Coburn, OK, Jim DeMint, SC, Johnny Isakson, GA, and Jerry Moran, KS.
In the last Congress, the 111th Congress, Carol and I attended a Chamber of Commerce meeting in a suburb of Tulsa where Dan Boren, our District 2 U.S. congressman, was the guest speaker. Nine of us showed up in FairTax gear—hats, T-shirts, jackets, and vests—to “ask” Boren to sign up to support the FairTax. Over the years, he had teasingly told Carol that he would consider it; it sounded as if he thought it was good legislation, but still he hadn’t supported it.
Boren had a reputation of saying what he thought his constituents wanted to hear but in reality, and up until the Obamacare fiasco, voted 98 percent of the time with Nancy Pelosi and his party. A typical politician.
While we were in line to get our pizza and salad, Carol spotted Boren in line at the back of the room, so we made a beeline to talk to him. Carol had a lot of history with Boren and reminded him of the many times he’d said he would consider FairTax and told him in so many words that it was time for him to put his money where his mouth was. I stood by for my chance to pounce, and when Carol finished her piece I jumped in and spoke as a representative of the Tea Party movement, explaining how FairTax is what We the People want instead of a repressive tax system. That FairTax is about freedom and jobs. It’s about smaller government and returning power to the people.
Carol got his commitment, and he announced it when he took the podium. What a coup for us! We got the first and only Democrat to co-sponsor FairTax in the 111th Congress.
At that time Dan Boren didn’t know who I was. There were several questions I had for him that stemmed from serious concerns voiced at every rally and discussed among friends and neighbors. Thinking ahead, I had worn a jacket over my FairTax T-shirt because what I had to say was coming from a concerned constituent and not necessarily opinions shared by the FairTax supporters in the room.
Boren made his opening speech and asked for questions. My hand shot up and I was called on. “What party do you belong to?” I asked. “Is it the party of out-of-control spending, bailouts, corporate takeovers, cram-down legislation, the party of Nancy Pelosi…” I had more to say, but I was cut off.
“What’s your question?” a man shouted.
“Yeah, what’s your question?” another yelled.
I finished my question: “Mr. Boren, is that your party?”
I sat down stunned. I honestly thought everyone was concerned about the frightening overreach of the new administration. Of course this was before I knew there are Republicans, there are constitutional conservatives, and then there are Democrats. At the time I knew little about politics; I just knew that I was afraid for our country. I was glad I wore a jacket over the FairTax logo. I had no idea whether others were embarrassed for me or not, but my face burned. Boren’s reply and the next question taught me all I needed to know.
Boren answered that he was “not in lockstep with Nancy Pelosi or the president,” that he listens to his constituents and makes decisions based on what he hears from them. He lied again when he said he frequently disagrees on the issues. Then he asked for more questions. A man raised his hand and said, “Tell us about your new baby.”