The panel proposes to spend the tax money gained from these two tax increases to cover the cost of eliminating the hated Alternative Minimum Tax.
There is nothing in these proposals that would reduce the cost of tax compliance in this country; a cost that by some estimates reaches between $300 and $500 billion a year. In fact, these proposals will increase the cost of tax compliance as individuals and businesses scramble to find a way to deal with these costly new tax rules. There is also nothing in these proposals that would in any way encourage home ownership. You simply do not encourage people to buy homes by threatening their cherished home mortgage interest deduction while raising their income taxes.
Finally, there is nothing in these proposals that would promote economic growth or individual savings and investment. You don’t improve America’s competitive position in the global economy by raising taxes.
There is, however, a proposal that would accomplish the objectives set forth by the president without increasing the tax burden on either the American people or American business. The proposal is H. R. 25, the FairTax Act, and it is the subject of a book co-authored by myself and by the author of H.R. 25, Congressman John Linder (R. Ga.).
Are the people of this country ready for wholesale tax reform? The president’s panel thinks not. Sales of The FairTax Book might indicate otherwise. The FairTax Book made its debut No. 1 on the New York Times Bestseller’s List. It is now in its eighth week as a bestseller. Can you remember the last time a book on tax reform showed this type of strength in the book market? No? Well then maybe there’s something to this tax reform proposal that has struck a chord with the American people.
There is no room here to go into depth on the FairTax. Very briefly stated, H.R. 25 would eliminate all personal and business income taxes, death taxes, Medicare taxes, Social Security taxes, capital gains taxes and the Alternative Minimum Tax. The FairTax would remove the embedded taxes that exist in the retail price of virtually all consumer goods and services, averaging 22%, and replace those embedded taxes with a 23% embedded consumption tax. Every American household would receive a monthly check from the government to cover the consumption taxes that would be paid on the basic necessities of life up to the poverty level. Businesses could operate in America without any tax component on capitol or labor. Individuals could save and invest without any tax consequences. The FairTax plan would completely eliminate the federal tax burden for America’s poorest families while bringing unprecedented economic growth and job expansion. American businesses and American dollars that have fled our crushing tax structure will be able to come back home to work in America without tax consequences. This is the type of tax reform the American people are looking for, not “business-as-usual” tax increases and politically expedient tinkerings with our already-broken tax code.
Enactment of the Fair Tax would constitute the biggest transfer of power from the government to the people since the ratification of our Constitution. Much more information on the FairTax can be gleaned from the website for Americans for Fair Taxation; http://www.fairtax.org.
If the president’s tax reform panel can’t be true to the president’s charge, and respond to the taxpayer’s demands for meaningful reform, it should be dissolved. Our elected leaders need to listen to the voice of the people, not of a panel of political hacks desperate to preserve the present status quo.