The 16th amendment to the U.S. constitution was passed in 1913 and has become a drag on economic growth and an administrative nightmare for taxpayers. The cost of compliance with 74,000 pages of regulations costs individuals and businesses over $430 billion per year. The privacy of citizens is intruded upon when we are forced to report personal financial information to the IRS. The true cost of the massive federal Leviathan is hidden in products and services throughout the economy. No one interested in efficiency and fairness would create such a monstrosity from scratch.
There is an alternative that has been talked about for years. It was advocated by 2012 Libertarian presidential candidate Gary Johnson and would be a vital ingredient in jump starting the economy. It is a national sales tax, otherwise known as the Fair Tax, to completely replace the income tax, regressive payroll taxes, as well as estate and gift taxes, which are particularly damaging to small businesses. What are the benefits?
1) Workers keep their entire paycheck. That’s right, all of it.
2) All households receive a monthly prebate equal to the poverty level to pay for life necessities tax-free with the benefit that this makes the Fair Tax progressive in its operation.
3) Social Security and Medicare benefits are not affected, while consumption provides a more consistent tax base than income.
4) This is a one-time tax at the point of sale. Used goods sold are not taxed. Business purchases for production of goods and services are not taxed.
5) U.S. businesses have increased competitiveness in foreign markets due to the removal of the income tax.
6) Americans will no longer be required to provide personal financial information to the IRS. We would be free of the possibility of owing additional taxes come April 15th, and we wouldn’t be required to file a return to receive a tax refund caused by over-withholding.
The initial Fair Tax rate would be approximately 23%; however, if we scale back the federal government to its limited constitutional powers, this rate could be drastically reduced and the monthly prebate increased.
Additional information can be found at www.fairtax.org
I do not live in a fantasy land. I fully understand that major changes such as the Fair Tax will not be easy. The ones living in a fantasy land are Republicans and Democrats, looking only toward the next election or even the next donation from a wealthy donor or special interest group. Kicking the proverbial can down the road cannot last forever, as we hurtle toward economic calamity. The American people must one day exact retribution at the ballot box against those who have done so much harm to our economy. This disastrous road began with the creation of the Federal Reserve cartel and passage of the federal income tax in 1913 during the first term of Democratic President Woodrow Wilson. It continued when Republican President Richard Nixon cut the last link to gold in 1971, with the resulting skyrocketing cost of living. The two major parties bear responsibility for these terrible public polices.
It is too late for easy solutions. Only tough ones remain. Does anyone really believe that the Republican and Democratic Parties are the ones to fix the mess they have made?
—Ken Hamilton, LPAR Executive Committee member