What is fair?
I have to hand it to Mr Boortz and Congressman Linder: whether you like their proposal or not, they are actually thinking about how to improve our current hideous taxation system. In fact, their proposal replaces the entire Internal Revenue Service so unless you’re a big fan of the devil you know, right off the bat their proposal almost has to be a good one.
The FairTax is a proposal to scrap the income tax in America and establish a consumption-based tax—essentially a national sales tax. Remember the first part there whenever you hear opponents to the FairTax claim that it would add a sales tax to the income taxes we have already.
Boortz and Linder paint a compelling picture, and it’s not my intent to restate their arguments. I’d rather you read the book or do other research yourself and make up your own mind. Having said that it’s compelling, I am obliged to provide some reason that I’ve found it compelling.
First, it would tax the wealthy without loopholes and without stifling the economy. That by itself seems like it should be the holy grail of tax systems. The current debate over taxing the top 2% of earners seems simple to both sides, but the fact is that it’s not so simple. Because both businesses and indviduals are taxed by the same mechanisms in the United States, you cannot levy a tax against the fat cats without also hurting the industries (mostly small to mid-sized businesses) we need to provide jobs and do other things that fall under the category of «economic growth.» Wouldn’t it be nice to get revenue from the wealthy without stagnating the economy? Well, the Fair Tax is the answer to your dream.
Second, it would end the nightmare of filling out tax forms. Since the FairTax would be built in to every purchase of new goods, only retailers (most of whom are already filling out forms for state sales taxes) would have any increase in paperwork. And that increase would be more than offset by the savings in paperwork from not having to fill out corporate income tax forms for the business.
Third, it would make it impossible for an individual to dodge paying taxes. Sure, there are plenty of ways one could avoid paying taxes—by only purchasing secondhand goods, for example. But there are many necessities that can only be purchased new.
Fourth, it would encourage ecologically-friendly re-use whereever possible. Since the FairTax only applies to new goods, there would be a significant price advantage to purchasing second-hand goods. In a culture that already has too many disposable items, providing financial incentive for people to pass on their goods and buy used items rather than filling landfills with perfectly good equipment is a great move.
Finally, do I even need to say it? It’s fair. People would get taxed based on their own choices. People that buy yachts and Lamborghinis will pay more each year in taxes than I’ll earn in a decade, but they could easily have avoided paying taxes simply by not buying the stuff they wanted to get. It makes it really hard to complain about taxes when you pay on what you spend rather than on what you earn.
I encourage anyone to investigate the FairTax, whether you actually read this book or not. However, it is a pretty quick read, so anyone interested in finding out more would do well to start with this book.
What I think will be more important than reading is writing I’m talking about letters to your elected representatives. Nothing will ever change unless there is demand from the constituency for improvement. At this point, even getting the FairTax into a more prominent part of the national discourse would be a great step in the right direction. In the end, it seems clear that we really ought to dismantle the draconian behemoth that is the IRS and get the country’s revenue in a simpler and more reliable way. The FairTax may not be the system we end up with, but it’s a much better idea than the system we’ve got.