Friday, April 24, 2009

How would you like to keep 100 percent of your paycheck

How Would You Like to Keep 100 Percent of Your Paycheck?




by Mark Luedtke








How much time and money did you spend doing taxes this year? Are you hoping a mild-mannered
IRS agent doesn't knock on your door? You would think the land of the
free could create a tax system that didn't require everybody to be so
brave, but our tax system isn't designed for us. It's designed to
empower professional politicians, bureaucrats and special interests by
sucking the wealth, creativity and work ethic from us.








It doesn't have to be that way. Suppose you could keep 100 percent
of your paycheck. Look at your pay stub. What's the difference between
gross pay and take home pay? Consider how much nicer your house and car
would be if you deposited the gross instead of the net. Contemplate the
quality education you could provide your children. Imagine the better
standard of living your family would enjoy.








The FairTax gives you that, and more. The FairTax was designed by
economists and tax experts for people. It replaces the Federal income,
payroll, which includes Social Security and Medicare, and other taxes including the death tax with a simple
consumption tax while keeping prices about the same.








To understand the benefits of the FairTax, you have to
understand how our current tax system works. All taxes today, before we
pay them, are first collected by businesses. When a company pays
Federal taxes, it passes that tax along to its customers in the form of
higher prices. When a company pays workers, part of that pay covers the
workers' Federal taxes, and it passes that expense along to its
customers in the form of higher prices. All taxes are ultimately paid
for by consumers in the form of higher prices of goods and services.








On average, 22 percent of the price you pay for any American made
product or service goes to Federal taxes. To put it another way,
embedded Federal taxes make up 22 percent of the price of every
American made product. You can think of it as a 22 percent overhead for retailers,
like utilities, for Federal taxes. The FairTax replaces that 22 percent
embedded
Federal tax with the 23 percent inclusive FairTax on new products. That means when you
buy a new $100 coat, you'll pay $100. $23 goes to the Federal government,
and $77 goes to retailer. The 23 percent figure was chosen to be
revenue neutral – the FairTax would collect the same amount of revenue as the current tax system.








The most obvious benefit is that every American would keep 100
percent of his or her paycheck (except for locations with state and
local income taxes) and immediately have a higher standard of
living, but the benefits go much deeper. Savings and investment income
won't be taxed. People who buy less stuff pay less tax. Americans waste
hundreds of
billions of dollars every year on tax compliance – the cost of doing
taxes correctly. Also, the government loses hundreds of billions in revenue to the underground economy. Drug dealers, illegal aliens and
President Obama's cabinet don't pay their fair share of taxes.
Everybody has tipped their waitress in cash so she doesn't have to
claim it. Our tax code is so oppressive, we don't blink an eye at cheaters.








The IRS has to monitor over a hundred million tax filers for
cheating. Because only a few hundred thousand retail outlets will pay
taxes under the FairTax, and even crooks buy retail, everybody will pay
and cheating will be greatly reduced. The agency that replaces the IRS
(replacing the IRS should be enough to get everybody to support the
FairTax) will be hundreds of times smaller, saving us all money.








One of the greatest benefits of the FairTax is that foreign goods
and services will be taxed the same as American goods and services. All
our trading partners have business friendly value added tax (VAT)
codes, so foreign goods and services have no embedded tax included in
their price. When Lexus sells a car for $50,000, every penny goes to
Lexus. When GM sells a car for $50,000, $11,000 goes to the Federal
government and only $39,000 goes to GM. Lexus profits. GM goes
bankrupt. Our tax code punishes American workers relative to foreign
workers, but the FairTax will put American workers on a level playing
field with foreign workers, and American workers will come out on top.








The FairTax is so good for business, every Fortune 500 company in
the world has promised to either open its next plant or move its
headquarters to the US after we adopt it, bringing jobs back to America
in a rush.








Some critics claim the FairTax sounds like we're getting something
for nothing. Not true. The immediate advantage in standard of living
comes from ending the waste of compliance costs, taxing the underground
economy, and taxing foreign products the same as American made
products. Additionally, $13 trillion that is sitting overseas working
in foreign economies would immediately flow back to the US. FairTax
would make the US the greatest tax haven in the world. Obama financed
his $800 billion stimulus boondoggle with debt. The FairTax is a $13
trillion stimulus package with no debt. Which do you think would better
boost our economy?








Other critics claim the rate would have to be higher because we'd
never tax food, medicine, health care or government purchases, but
those products include embedded taxes already, and why should we favor
their producers? Besides, the FairTax includes a prebate based on the
number of people in a household to cover taxes on basic necessities.
The prebate completely untaxes Americans below the poverty line. As
for prices, some will rise a little; some will fall a little. Import
prices will rise significantly. Other critics say quoting the rate
inclusively is misleading. Apparently those demagogues aren't smart
enough to understand the comparison to embedded taxes.








Adopt the FairTax to spark an economic renaissance unparalleled in US history.


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