The Fair Tax is gaining momentum. My Congresswoman said that she has heard a lot of people calling for the Fair Tax since the IRS scandal broke. Perhaps you should call or write to your congressman today and demand they pass the Fair Tax.
Why should you? What’s in it for you? Well, here are ten reasons you should like the Fair Tax.
10. You would get your whole paycheck. There would be no taxes taken out (ok, maybe state taxes, depending where you live). No federal income taxes, no Social Security taxes, no Medicare taxes. This means you’d start with 20-45% more money.
9. You would not need to keep any paperwork. With the income tax you need to keep documentation of what you made, what you gave, what you bought, and other things. All of this goes away with the Fair Tax.
8. The tax can be as level or progressive as you want. The tax gives a prefund – money sent out to every citizen each month or each year – to cover a share of the taxes paid. By raising the level of the prefund, you raise the spending level at which people start to pay taxes. For example, if the prefund is $4000 and the tax rate is 20%, then no one would pay any taxes on the first $20,000 per year that they spent. This would be enough for most families to buy food, shelter, and basic clothing.
7. Paying taxes would be as easy as paying sales tax. The Fair Tax is a national tax on the purchase of new goods. You would just be told what to pay when you were buying new goods and services – no complex forms required. You pay the tax and then forget about it.
6. April 15th would be just another day. Why ruin a nice spring day with needing to get your forms filled out and sent in.
5. Income tax forms are a prime target for identity thieves. Just think about it – your social security number, full name, address, employer, dependants, and bank account data all in one place. No wonder thieves are stealing these forms from mail boxes and from accountants who file electronically.
4. Everyone who spends money would pay the tax. Drug dealers, prostitutes, hitmen, bootleggers, illegal aliens, people paid under-the-table and everyone else who doesn’t typically file income taxes on their income now still spends money. They would pay the tax like everyone else when they did so, meaning that taxes could be lower for everyone else.
3. Costs of products would be lower since businesses would not need to spend lots of money figuring out the best way to shelter their incomes.
2. You would not need to spend hours filling out forms, paying an accountant a few hundred dollars to help you, or even fifty dollars for tax software each year.
1. The IRS would no longer be needed and have no power over anyone. Because you would pay your taxes when you bought things and not need to prove to anyone what your income was and what deductions you qualify for, there would be no fear of a letter in the mail or a phone call about an audit. There would still need to be enforcement to make sure businesses were not dealing under the table, but this would be a lot less subjective.
There are plenty of other reasons to like the Fair Tax. Learn more about it, then tell a friend if you like what you see. Things can change – it will just take a lot of people making their voices heard.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.