Mesa Legend - ARCHIVES - Vol. 40, Issue 8


Volume 40, Issue 8. Today is .

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Volume 40, Issue 8.
January 21, 2003

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Legend's View

Taxing the system

The arrival of tax forms in the January mail signals that tax season has begun, but what if April 15 was just another beautiful spring day?

If so, the IRS tax code would be gone.

In the late 70’s then President Jimmy Carter called the federal income tax system “a disgrace to the human race.”

At that time, the tax code contained 23,000 pages.

Today that number has grown to 46,000 pages.

If we put our tax forms end-to-end this year they would wrap around the earth more than 28 times.

The tax code has become so complex and riddled with loopholes that more than fifty percent of American taxpayers hire tax professionals to file returns for them each year.

Most agree that the income tax is unfair, complex and invasive, but what would be a better system?

In 1994 a group of business leaders, pondering the tax situation over lunch, decided to put up 1.5 million dollars of seed money to fund research and focus groups to answer this question.

They hired economists from some of the leading institutions including Harvard, MIT, the Argus Group and The National Bureau of Economic Research.

Their findings concluded that a system of taxation should be fair, visible and easy to understand. The result was dubbed the “FairTax.”
The FairTax Act (HR 2525) is bi-partisan legislation co-sponsored by Minnesota Democrat, Collin Peterson and Republican, John Linder.
The bill, currently before congress repeals all corporate and individual income taxes; payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes.

In their place it imposes a revenue-neutral national sales tax on all new goods and services at the point of final purchase for consumption.

The bottom line: a person would take home 100 percent of your paychecks, social security or pension checks.

According to Herman Cain, CEO of the Godfather’s Pizza and spokesman for the 420,000 plus member Americans for Fair Taxation (AFFT), the FairTax “is a truly voluntary tax because it hinges on taxing consumption, not income.”

An individual would control how much tax they pay by deciding how much they choose to spend. Former Treasury Secretary Paul H. O’Neill noted that an income tax, “places a high price on success, hard work and risk-taking.”

A consumption tax, on the other hand, rewards hard work, savings and investment.

Some critics of the Fairtax say that the 23 percent sales tax rate is too high many of the current taxes are hidden in the cost of goods.
With the FairTax, people would know exactly how much tax they are paying each time they make a purchase.

Proponents counter that we are currently paying 20–22 percent for the cost of embedded taxes alone.

These are the corporate income taxes that are passed on to consumers in the costs of their products.

Add to that any income, payroll and capital gains taxes we pay and, for most, their current tax rates are well above 23 percent.

Instead AFFT research shows that 95 percent of all Americans will pay lower taxes with the FairTax.

And, embedded taxes are most harmful to the poor who are burdened with these costs when purchasing necessities.

The FairTax on the other hand removes taxes from the poor by providing monthly checks to households for the cost of necessities.

Perhaps the greatest criticism of the FairTax, is the charge that it will never happen; that lawmakers will never support such sweeping change.

To this Cain replies, “A threat to being re-elected coming from the voters in every district in the country” would force congress to sit up and take notice.

“I’m convinced that the only thing that will cause major needed change is a groundswell of voter support.

The radical idea isn’t the national sales tax,” he said.

“The radical idea is staying with the screwed-up system we currently have. Because of the way our system works, I do not believe we can solve both of those problems at the same time.” With 420,000 members and growing, Cain and the AFFT volunteers hope to create the grounds well needed to make April 15 just another spring day.

For more information about the FairTax visit the Americans for Fair Taxation website at www.fairtax.org, the Arizona site at www.azfairtax.org, or call 1-800-FAIRTAX ext-111.