Our Economic Mess is SOLVED !!

We found a way out from under the ridiculous U.S. Tax system!!

The following are excerpts from a letter sent in by Britta Schletter to Mansfield.com outlines the plan very well!!

Dear Mansfield Today Editor,

The FairTax is a proposal that would shift the tax base from our current system - one based on income - to a consumption-based, federal, retail-level sales tax on all new goods and services.

The FairTax eliminates a multitude of payroll and extravagant taxes and replaces it with a 23% consumption tax.

Also, the FairTax includes a monthly prebate - or a check from the government for the amount of money the individual or household spent in taxes on necessity items, according to the federally-determined poverty level. This prebate makes the FairTax progressive.

The FairTax Bill introduced as H.R. 25 to the House of Representatives and S.1025 in the Senate,.... now has 78 currently listed supporters (See: FairTax Scorecard). The Congressional support has been gaining momentum; all it needs is more grassroots publicity.

The FairTax eliminates, completely:

individual income taxes,
the alternative minimum tax (AMT),
all corporate and business income taxes,
the capital gains taxes,
social security,
Medicare,
and all other federal payroll taxes,
the self-employment tax,
the estate tax,
and gift tax.
These taxes are replaced with a 23% consumption tax..........

Also, the failure of our government-run social security and Medicare program is rapidly approaching,... with social security projected to be depleted by 2040, and Medicare by 2018 (Sahadi). Huge numbers of the U.S. population are dependant on these programs - they need to be fixed, and quickly.

Help for businesses

Our current tax code has also stifled businesses, and discouraged successful business practices.

According to the current director of the Congressional Budget Office, “making ‘tax decisions’ rather than ‘economic decisions’ (that is, making decisions that will reduce your taxes rather than increase your income) is a practice that costs our economy 18% of our gross domestic product- a whopping $2 trillion loss in the GDP,” (Boortz…The FairTax Book, 49).

In an economic environment where businesses could make economic decisions rather than tax decisions in America, huge GDP growth would be seen.

The taxes forced upon businesses are passed along in the way of higher prices to consumers. These are known as “embedded taxes”.

As estimated by Dr. Dale Jorgenson, the former Chairman of the Harvard Economics Department, on average, consumers are already paying 22% embedded taxes in a wide range of industries at the cash register (Jorgenson). This means, basically, that prices after the FairTax would only rise slightly. And keep in mind, consumers [would] now have their entire paycheck, a major increase in household revenue.

Simplified taxes

Compliance costs associated with the current tax code are often not well publicized. “In 2005 the estimated time the average American spent on the process (filing individual income taxes) was up to 27 hours… This December report (from the Tax Foundation) calculates that 6 billion hours and $265 billion were spent to comply with the federal income tax in 2005,” (Boortz… The FairTax Book, 40,43).

All of this time and money is wasted because of an outrageously complicated tax code that IRS employees frequently mess up. “Since 1954 the number of words in our tax code has increased by nearly 500%, the number of words in the IRS regulations has increased by 939%,” (47).

The FairTax bill that includes both the code and regulations is only 132 pages long, compared to the over 60,000-page income tax, and is significantly simpler (Linder, Rep….).

More jobs

American companies are not globally competitive, because of the suffocating tax code. “If we were to pass the FairTax… we would be the only nation in the world whose companies could sell into a global economy with no tax component in the price system,” (Boortz… The FairTax Book, 65).

This means two specific and wonderful things for our economy. Companies will come to America, reversing out-sourcing. They will bring jobs and contribute to our economic boom. America will regain our leading status in the world. With the millions of jobs, comes higher wages, more money to spend - and higher revenue for the U.S. government.

The Comptroller General, David M. Walker, testified before the Full Committee of the House Committee on Ways and Means that, “By the year 2040 the entire federal revenue stream will be insufficient to pay just the interest on the federal debt,” (Boortz…FairTax: The Truth, 34). The FairTax will grow the economy and widen the tax base, and therefore raise tax revenues, at least buying the U.S. government time to figure out how to raise the money to run the country. (even illegal aliens, drug dealers, international tourists, etc. will become part of the tax base)!!

So many problems are addressed by the FairTax, attention needs to be brought to its immense potential to save America’s economic future.

Repeated studies prove the benefits of the FairTax are widespread and numerous. Dr. Jorgenson’s research analyzed the benefits of the FairTax, and his findings are fully in support of the proposal. According to his published study, “the NRST (national retail sales tax)… would have an immediate and powerful impact on the level of economic activity… GDP would increase by almost 10.5% in the first year. This increase would gradually decline to a little under 5.4% over the next 25 years,” (Jorgenson).

This 10.5% GDP growth is absolutely huge. Those are the kind of numbers America needs to reestablish its dominant position in the world - and the FairTax will deliver.

FairTax supporters see the need for a tax code that does not penalize success, but rewards it.

Although every tax proposal is imperfect, the FairTax has a wide range of benefits that would stimulate both short-term and long-term economic growth.
America needs something to drastically change its grim future, we are losing ground as the dominant force in the world. The FairTax can reverse this, and will - if given the chance.

Sincerely,

Britta Schletter