Letter to Editor

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The fair tax
Well, it’s election season once again and I’ve been listening to the candidates, to the pundits on all sides and have carefully observed the “debates” and find that one issue has come to the forefront as it does in almost every election . . . the issue of taxes. Almost every voice in this farce of political theater beats the same tired horses as everyone of their predecessors; “we need to lower the tax rates”, “we need to simplify the tax code”, “we need revamp/eliminate tax deductions and credits”, “we need to implement a ‘flat tax'” and “we need to close ‘tax loopholes’ for the rich” but not one, with the exception of Governor Huckabee, dares to confront the only real solutions . . . . repealing the XVIth Amendment and totally eliminating the draconian, corruption prone personal income tax system which penalizes industry and productivity and by throwing out the entire, incomprehensible and burdensome tax code.
While I don’t personally support Governor Huckabee, and would not want him for president, his tax plan is totally in line with what I’ve thought for years . . . we need to do away with the present personal tax system and replace it with a “fair tax” system. What could possibly be fairer than a tax system that imposes the exact same tax rate on everyone regardless fiscal station in exactly the same way by taxing them based on their CONSUMPTION from society rather than taxing them on their CONTRIBUTION to society.
The “fair tax” is variously called the “consumption” or national sales tax and is probably the simplest, most equitable and most easily managed system of taxation not to mention the most comprehensive. It also has the advantage of being the least apt to be circumvented. In addition, the consumption tax would have the additional advantage of capturing a portion of the “underground economy”. The underground economy consists of “under the table” income, unreported income and income from illegal sources all of which currently go untaxed and is conservatively estimated to be $2 TRILLION dollars a year or more. A consumption tax would translate into an immediate, huge rise in income for every American worker since there would be no taxes deducted from their “pay checks” (with the possible exceptions of SSI and state and local taxes) and would totally eliminate the annual chore of filing personal income tax forms.
How would it work? It is simplicity itself and it is something we are all familiar with; using a consumption tax rate of 10% as an example every time an individual makes a purchase that purchase would be taxed an additional (to existing state and local sales taxes) 10%. If you go clothing shopping for example and spend $100 on clothes you’d pay $10 in consumption taxes on the purchase however if someone else spends $300 on clothes they’d pay $30 in consumption taxes. In other words the amount of taxes people would pay would be under their control . . . the more you consume the more tax you pay. On the merchant’s side, it is the merchant that has the responsibility to collect, report and pay the consumption tax to the federal government as they do currently with state and local sales taxes to those respective entities. Intuitively you may have surmised an additional benefit of a consumption tax system; a drastic reduction in, and the near elimination of, the present Internal Revenue Service since the collection agency would now be dealing with a much smaller customer base (only the merchants not the entire working population) and the tax filing of that base would be a simple, 3 line form; line 1 how much did you sell, line 2 10% of line 1, line 3 send the amount on line 2 to the federal government.
Sounds too good to be true, what’s the down side? The detractors of the fair tax will tell you that (1) a consumption tax would depress consumption, (2) a consumption tax would eliminate tax preparation businesses, tax attorneys and advisors and (3) the government could not function on the amount of money collected. In response I’d counter with the following. Firstly, think about it; have current sales taxes caused you to spend less, what happens when you receive an increase in disposable income (money that you have above what you need for necessities such as food, housing, and clothing) do you spend less money or more money? Secondly, while it is true personal tax preparers, attorneys and advisors will no longer be necessary corporate and business taxes would still exist and will need various tax services. Thirdly, currently the federal government takes in approximately $1.4 trillion in personal income taxes (2014) which is 46% of total tax revenues (2014) it then spends your money like “drunken sailors” on shore leave without any real consideration of federal budgets which are a total farce. While, at the present value of total retail sales, it is true that a consumption tax would not reach this level of revenue the simple truth is that the fiscally irresponsible federal government will have to learn to do what almost every fiscally responsible American family does . . . learn to live within their income, institute a true zero based budget system and learn, for them, to eliminate extra-constitutional expenditures, departments and programs; in short, reduce the federal government to only those functions provided for in the constitution and it needs to “sober up” and become fiscally responsible.
Lou Sansevero, Ferron