How would you like to be free of all federal taxes - individual, payroll, corporate, estate, gift, whatever? No withholdings, period. In addition, at the start of every month, Uncle Sam would send you a $480 check.
Also, that 5.5-million-word, 17,000-page federal tax code monstrosity that nobody, not even Internal Revenue Service agents, understands - would be tossed into the garbage bin of history, and the IRS along with it. Gone, too, would be the tax preparers and lawyers whom taxpayers and businesses spend hundreds of millions of dollars on each year - their help wouldn't be necessary anymore.
How could this wonderful new world come about? Simple. Just get Congress to pass H.R. 25, authored by U.S. Rep. John Linder, R-Ga., and which already has 54 co-sponsors, including U.S. Rep. Jim DeMint, R-S.C., candidate to succeed retiring U.S. Sen. "Fritz" Hollings, D-S.C.
H.R. 25 is the FairTax plan. It would replace all current federal taxes, which raise $1.7 trillion annually, with a national sales tax set at 23 percent, about what existing federal taxes add to the costs of goods and services. It would pay for all federal obligations, including Social Security, Medicare, defense and homeland security.
Yet the national sales tax would be revenue-neutral. It also would be progressive - wealthy people naturally would pay more in taxes because they buy the most goods and services. But to make sure poor folks aren't unfairly burdened, the feds would send a sales-tax rebate check of about $480 every month to U.S. taxpayers based on household size and the nation's official poverty level.
Other benefits of the FairTax plan is that it would be much harder to "game" or "loophole" the system out of revenues, as is so widely done now. Criminals, who seldom pay any federal taxes, could not avoid paying sales taxes on all their legal purchases. The lack of corporate taxes would make U.S. products much less expensive to sell abroad, thus reducing our horrendous trade deficit while revving up our economy and job market at home.
DeMint's opponent in the Palemetto State Senate race, Democrat Inez Tenenbaum, has been running TV ads attacking the congressman's support of the FairTax. But she makes it sound like the sales tax would be added onto existing federal taxes - which, of course, is not the case. It replaces those taxes, and in the long run would lower taxes for most Americans.
It's also fair to note that DeMint says his mind is open to any tax reform system that will lighten and simplify taxes. He's calling for a national bipartisan commission to study all rational tax reform proposals - and then recommend to Congress the best one to legislate.
Anything is better than the behemoth, incomprehensible tax code we have now. Yet by attacking DeMint's reforms and not proposing her own, Tenenbaum comes off as a defender of the status quo. Does she really think it's not possible to develop a fairer, more honest tax system than what we have now?
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