Enact the FairTax

In this Game Changing Idea we bring you the single biggest Game Changer there is.

What if we told you that there was a tax system that:

  • Got rid of the IRS
  • Removed the possibility of audits.
  • Let you keep every dime of your paycheck.
  • Paid you money every month.
  • Would drive manufacturing jobs back to the United States.
  • Would lower the cost of products.
  • Wouldn’t make you fill out pages of forms every year.
  • Would take your tax compliance  cost to zero.
  • Would lower the cost of doing business in the United States.
  • Will save the Government Billions of Dollars every year.
  • Will Save Americans Billions every year.
  • Is not regressive.
  • AND CAN NOT BE USED AS A WEAPON.

First the big question that people normally ask : Will the government be able to run on the amount of revenue that this brings in?  Yes, it is revenue neutral.

We are speaking, of course, about The FairTax.  Not to be confused with “A Fairer Tax” or a “Flat Tax”.   The FairTax gets rid of all current Federal Income and Payroll Taxes and replaces them with a National Consumption Tax (AKA : A Sales Tax on New Goods only)- and is the only type of Consumption Tax that is not a Regressive Tax by virtue of a Prebate System. So lets break down all of the points above.

Gets rid of the IRS

Simple, we won’t need them anymore.  The IRS costs over $12,000,000,000 a year to administer, has a habit of using force to require compliance, has unjustly targeted Americans, requires you to keep 7 years of records -though we found out recently that they only keep 6 months of their own records-, decides if/when you owe them more money & takes it from you without a hearing, is the most feared and hated Government Agency.  So we can toss ’em.  Because under The FairTax we don’t need them.  The IRS’ main job is to look at how much money you make and figure out how much of that you owe.  Since The FairTax is not an income tax we don’t need a Special Agency to figure out how much you owe out of your paycheck.

Removes the possibility of an Audit

We’re getting rid of the IRS, who is going to audit you?

Lets you keep every dime of your paycheck.

Ok, so not EVERY dime unless you live in a state where there are no income and payroll taxes.  However since all FEDERAL income and payroll taxes would go away you would see your take home pay go up dramatically.  The FairTax gets rid of all federal payroll and income taxes. Which range from 13.65% to 60% of your paycheck depending on your income level -according to the IRS.  YES, EVEN PEOPLE THAT LIVE BELOW THE POVERTY LINE AND WORK PART TIME FOR MINIMUM WAGE STILL GET 13.65% TAKEN OUT OF THEIR PAYCHECKS BY THE FEDERAL GOVERNMENT!  Under the FairTax you get to keep your money.

Pays you every month

This is the part that tends to trip people up.  When most people hear “Consumption Tax” or “Sales Tax” they immediately think “Regressive Tax”.  Because, traditionally, those types of taxes hurt the poor more than the rich.  The FairTax fixes that problem with the “Prebate”.  Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax provides a monthly universal prebate to ensure that each family unit can consume tax free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application. There is no marriage penalty as the couple gets twice the amount that a single adult receives.  Basically you get a check every month to cover tax on purchases up to the poverty line so that there is effectively no tax on people at or below the poverty line.  Here is the break down:

Drives Manufacturing Jobs back to the USA

Right now it is less expensive to pay to make items overseas because of the tax burden placed on manufacturing.  Think about that for a second.

Because of the current taxes on US manufacturing it is cheaper to:

  • Pay  foreign workers to make items.
  • Pay foreign workers to package the items
  • Pay to ship the items overseas -by boat.
  • Pay insurance for the shipping by boat.
  • Pay an excise tax from the origination country.
  • Pay an impost tax to import them items to the United States.
  • Pay a port fee.
  • Pay to load onto a train.
  • Pay to ship from the port to their facility by train.
  • Pay for insurance on the train shipment.
  • Pay for truck shipment from the nearest train yard.
  • AND pay for insurance on the truck shipping.

AND DON’T FORGET THAT THIS PROCESS TAKES MONTHS LONGER THAN IF THE ITEM WAS MANUFACTURED HERE!

It is estimated that the Fairtax will bring over 12 TRILLION (YES TRILLION) dollars into the economy in the form of jobs and investment because it would now cost more to take all of those steps above than it would to manufacture items in the US.

Would lower the cost of items

Do you realize that Tobacco, Alcohol, Gasoline, and Airline Companies all pay more in Federal Taxes than they profit?  These are called Excise Taxes -but referred to as SIN Taxes- and they are levied on products in addition to company base taxes.   Other NON-SIN tax items that still have extra excise taxes added on are Bows&Arrows, Sport Fishing Equipment, Tires, Indoor Tanning, Cars that get less than 22.5 mpg, Medical Research, the list is quite long and very sporadic.

And Remember, those Excise taxes are in addition to the base tax rate which ranges from 10%-39.6%.  Now imagine that all of thise taxes went away.  Opponents of the Fairtax say that means a windfall profit for businesses and damage to the consumer because manufacturers aren’t going to lower their prices.  Well those people don’t understand business.  Here is why:

Lets say we have 2 companies (A co & B co) And they both make phones (using phones as a place holder this example could be used for nearly all products) .  A co & B co’s phones are almost identical, work on the same networks, same screen size, same camera megapixels, et cetera.  It costs the same to make them at $250(including all taxes that they pay) and their MSRPs are the same at $400 (which represents a 38% profit margin -actually a lower than standard profit margins, in fact the Average profit margin on Apple iPhone is 53%  according to Apple’s statements in their lawsuit against Samsung.).  The only difference in the products is the brand.   A co has been in business for a long time and built a reputation for quality, thus they have a market share of 75%.  B co is a relatively new company and even though they are winning over users with their product quality they still only have a market share of 25%.

Now the Fairtax gets passed.  The cost of producing the items goes down by 39.6%, or $99, because now there are no corporate taxes to pay.  The companies are left with a question: Do we pass the savings along to the consumer or do we keep our prices the same and increase our profit margins?

Most people would parrot the idea “Those greedy corporations will milk us for every dime!  They won’t lower their prices!! Are you NUTS!!!”  But must people would be forgetting about competition and the smaller company that wants more market share.

Lets say A co decided to just take the windfall profits they keep selling at $400 which sees their profit margin soar to 63%.  B co wants more market share so they decide to drop the price from $400 to $300 (showing a profit margin of 50%) and use the rest of their additional profit to engage in a massive ad campaign to better promote their product.  After a few months B co now has a market share of 45% of new phone sales and A co is concerned that even though they are profiting more, a lot less people are buying their phones and they are now making less than they were.  So now A co drops their price to match at $300.  But B co was already planning for this and dropped their price down to $250 (which represents a 40% profit margin) and they continue to gain market share.

B co has dropped their price $150 while at the same time increasing their market share and their profit margin.

In the example above we show why even the greediest of corporations will lower the cost of their goods.  We only used an example of 2 manufacturers in an industry where there are over a dozen.  And every almost every industry has a dozen or more competitors.  The race to offering the lowest price will be staggering.

Wouldn’t make you fill out pages of forms every year

Since you don’t need to account for every cent you earned, or were given, and you don’t need to account for every expense  the form is stupid simple.  Names and Social Security numbers of the people in your home.  AND you update it when ever you move.  That is it!  With the FairTax, all the government wants to know is where to send your prebate check!  A Member of Game Changer PAC timed himself writing his address, the names of people in his family, and their SSNs.  For his family of 4 it took him 39 Seconds.  How long did it take you to do your taxes last year?

Would take your tax compliance  cost to zero.

You will never again need to pay someone to do your taxes!  According to the National Society of Accountants, the average Tax Preparation fees in the US was $261 in 2013.  According to the IRS, 102 Million Americans filed through a Tax Preparation service Like H&R Block, Liberty Tax Services, Jackson Hewitt, and others.    Lets do some quick math -understanding that it will be a round number not specific number.

102,000,000 X 261 = 26,622,000,000 ( ALSO KNOWN AS 26.6 BILLION DOLLARS! )

Enacting the FairTax would save American Tax Payers over 25 BILLION DOLLARS PER YEAR in compliance costs

Would lower the cost of doing business in the United States.

We have already covered this in some points above but it is worth repeating.  It will save AMERICAN companies up to 39.6% by enacting the FairTax.  This will allow them to lower costs and hire more workers.

Will save the Government Billions of Dollars every year.

Since the FairTax gets rid of the IRS it won’t have to pay the IRS budget of 12 BILLION dollars per year.  A Direct and Immediate Savings to the Government.

Will save Americans  Billions of Dollars every year.

Through 3rd party compliance savings alone Americans will save of 25 BILLION dollars per year.  Add to that the cost of DIY tax prep software that nearly 50 million Americans bought and used in 2013.  The Savings from not having taxes taken out of your paycheck. And we can’t forget the savings via lower priced goods.

Is not Regressive

A Regressive tax is one that taxes the poor and a higher rate than the rich.  You will hear a lot of misinformation when it comes to the FairTax and the word “regressive” will be thrown around quite a bit.  The people that are telling you that the tax is regressive are thinking about sales taxes in general.  But the FairTax is a new type of sales tax that offsets purchases up to the poverty level of spending.  Which means that people who are at the poverty level will have a tax burden of 0%.

Conversely people who are wealthy spend much more money on high priced items.  Thus they will pay much more in taxes.

CAN NOT BE USED AS A WEAPON

This is one of our favorite aspects about the FairTax.  Representative Maxine Waters (D CA-43) one said, when referring to banks :  “We need to let them know that if they don’t come up with loan modifications and keep people in their homes, that they’ve worked so hard for, we’re gonna tax them out of business”.  No matter what you feel about the sentiment of keeping people in their homes, the other sentiment was that she wanted to use the tax code to target individual banks and tax them until they could no longer remain in business.  It is wrong for Representatives to even think that, let alone call for it in a public speech!

Regardless of who the “Target” may be, the tax code should not be used as a weapon.  The FairTax CAN’T be used as a weapon and that is a big reason why so many members of congress oppose it.  The FairTax takes away their power to use the tax code as a weapon .


ENACT THE FAIRTAX

TO: THE PRESIDENT, MEMBERS OF CONGRESS, et al.:

I call upon Congress, the President, and all State Legislatures to repeal the 16th Amendment to the Constitution and Enact the FairTax legislation.

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