Morgan's WebWorks

Examiner

...His segue to his standard stump speech then took an odd turn when he looked to several sign-carrying Fair Tax supporters in the crowd and announced yet another grandiose, over the top proposal like many that the public has come to expect in his campaign. He said he wants to “sponsor and … support creating a commission on the Fair Tax, putting together a computer model so that every American can go on line, take their current budget, compare what it would be like under the Fair Tax versus what it would be like under the current tax code.” Not to be outdone by such a simple proposal he then went on to say that “once that commission has done that, I would then like to have 435 Congressional District Commissions, so that we would be in a position to have hearings in every single congressional district where people could come out and ask questions, offer improvements, figure out how to do it.” (Yes, he said this. I have the audio.)

Gingrich’s proposal to create commissions and committees to study ideas is something we should expect from a former congressman. Before offering to create a Commission, the former Speaker should probably have visited the Fair Tax web site where there is already a calculator to compare the Fair Tax with current tax rates.  Perhaps, judging by the crowd’s less enthusiastic response to 435 Congressional District Commissions, the Far Tax supporters saw the possibility that a Fair tax proposal under Gingrich would be mired in an endless stream of perpetual committee meetings resulting only in volumes of committee reports and studies that no one would ever read.

Like so many other of his grandiose ideas, this had the ring of something well thought out and planned, studied and approved before the announcement. In reality Gingrich has the ability to throw these ideas out rather impulsively – using the orator’s gift to stimulate the crowd’s excitement and moving on to the next topic before anyone can ask, “wait – what?” It will be interesting to see whether his Fair Tax Commissions will go anywhere outside the walls of Memorial Hall.

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The Washington Times

...First, we need to get rid of the income tax. When our first great Supreme Court justice, John Marshall, equated the power to tax and the power to destroy, he was predicting what’s happening to our country right now. Giant, slow corporations spend their money on lobbying because tax avoidance is where their profit is. General Electric earned $14.2 billion in 2010 and paid zero taxes on it. Why? Because it has the lobbyists to get subsidies and tax breaks.

But those mom-and-pop stores? The tech startups? The nimble new corporations with new ideas and new visions for our economy? They pay as much as 35 cents on every dollar they earn. When the company pays its employees, the government taxes that money again. We need to stop taxing work, savings and investment. I advocate removing all income taxes, all capital-gains taxes, and replacing them with a consumption tax, kind of a national sales tax called the Fair-tax.

We also need to get rid of payroll taxes. Look at it from the perspective of employers for a moment. When they want to hire someone, it costs more than just the wage they’re paying. They have to pay payroll taxes, including for Social Security and Medicare. That cost is about 10 percent of the wages they pay an employee. Remove that burden, and employers will be able to hire 10 percent more people. With an unemployment rate of 10 percent, why wouldn’t we jump at this chance? The Fair-tax replaces employment and payroll taxes.

So how does Fair-tax fund the government? When anyone purchases a new good or service for personal consumption, be it a DVD or a yacht, the person is taxed. Fair-tax doesn’t tax used goods or business-to-business purchases.

Some think the Fair-tax is regressive, but in fact it’s progressive - taxing the wealthy more than the poor. Fair-tax issues a “prebate” for families to spend on food, clothing, transportation, medical care or whatever they want to spend it on - it’s their money. Undocumented immigrants will pay their taxes if they want to buy anything. They need a Social Security card to receive a prebate, so the incentive is for immigrants to get themselves on the books as fast as possible...

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NJ.com

To the Editor:

Joseph Bastrimovich (letter, Jan. 24) complains that all of the letter writers who defend the “fair tax” come from northern New Jersey, so I thought I would satisfy him by writing from my home here in Woolwich Township, where the Gloucester County Times circulates.

Let me state right from the outset that I am the volunteer District Director for the Fair Tax here in the Second Congressional District of New Jersey. Hence, nobody is paying me to promote the fair tax . Furthermore, I do not know whether I would benefit directly and personally from it.

Having said this, I promote the fair tax because — for good reasons — I truly believe in it and what it can do for the United States

Bastrimovich is absolutely incorrect with respect to one very important point in his argument: The wealthy do not get a windfall from the fair tax.

On the contrary, it is actually the lower-income and middle-income citizens who would benefit disproportionately from the fair tax.

First, the fair tax proposal (a type of national sales tax) eliminates payroll taxes — which are highly regressive. Second, the fair tax eliminates other tax costs embedded in the price of everything you buy and every service you use — which hit the poor the hardest. Third, The fair tax is made progressive through a “Family Consumption Allowance,” or “prebate,” which reimburses every household in America that has a valid Social Security number, in advance, for tax on consumption of essentials up to the poverty level.

Everyone benefits from this allowance, but the poor benefit the most.

Finally, economists measure how regressive taxes are by using remaining lifetime resources, while politicians measure taxes using a single year’s income.

When you tax a corporation, who really pays the tax? Look in a mirror. Profitable businesses pass tax costs onto consumers. Or, they pay lower wages, produce shoddy goods, or reduce dividends to union pension funds. Or, the businesses send jobs overseas.

With the fair tax, corporations would send products overseas. The fair tax treats Fortune 500 corporations the same as mom-and-pop businesses. Big businesses and industries, which can afford lobbyists, no longer have an unfair advantage under the fair tax. And the same goes for wealthy people.

In conclusion, I would respectfully request that Bastrimovich take a second, closer look at the merits of the fair tax as the best alternative to the current tax code.

- Randy Poulson, Woolwich Township, NJ

This article can be viewed here.

Smoky Mountain News

To the Editor:

...What America desperately needs is major tax reform. Many people see this and are in support, but the big guys like hiding the pea and have attorneys working against reform of any kind. The Fair Tax is a step in the right direction for tax reform, where each and every citizen with a Social Security number gets a prebate in the amount of defined poverty level. Income is not taxed at your employer, we would do away with the current tax system, and we would stop all the complicated tax filings that most Americans find hard to understand. Savings are not taxed, thereby encouraging more to save. Capital gains and the death tax would go away! What this would eliminate is the double and sometimes triple taxation on goods and income that is in place now.

We would all be taxed on consumption at a rate set by Congress. Hence, those who have excess money to spend would pay more (i.e., those who can afford to buy Porches, airplanes, yachts, brand new large homes).

Taxes would be collected at each state and sent to Washington, and the system is already in place for a smooth change. Don’t forget the prebate, which each citizen would receive, helping those who are most in need and paying for most of their taxes owed. State and local taxes would most likely stay the same, but some states have also implemented a system similar to the Fair Tax. Americans would be keenly aware of any significant upward change to the rate, and the people would speak up!

There is much more to this, and I urge you to go to www.fairtax.org and take a look and call. Also, take a look at the Flat Tax, the similar but opposing idea. Both have merit.

There are already 57 senators who have signed on to this idea, but I can tell you there are people with big money who want the status quo to remain, so they can hide their money under myriad loopholes and pay far less than their share. Lobbyists are alive and well fighting this change. If we simply stay with the same tax system, those with the big money will continue to find the loopholes, as our system benefits them the most. We must make the lives of Americans easier and fairer with a clear way of taxation!

Let’s get on with real change in Washington and stop the smoke and mirrors game that is currently blinding our citizens. Please do some research into this and contact your congressional members in support of major tax reform.

This real change will help America and all her citizens!

Sonja Thompson, Franklin

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News-Sentinel

Do we really want the IRS to punish productivity?

...If you have the stomach for real tax reform, the 63-year-old retired salesman suggests, try chewing on the “fair tax” – a proposal that was first introduced in Congress 13 years ago and would replace all federal income and payroll taxes with a national sales tax advocates say would be about 23 percent.

As assistant state director for Fair Tax Indiana, the Fort Wayne resident and tea party supporter spoke to about 20 groups in 2011 and was in Wabash Monday night to expound the virtues of a system that would tax consumption instead of productivity.

“I was surfing the radio in 2005, and I don't know whether it was serendipity or divine intent, but I heard somebody talking about the fair tax,” Armstrong recalled. “I told myself I was going to find out if it really was a crazy idea, and I've been studying this for three years and I'm convinced it will work.”

Now, I'm not about to endorse a radical shift in tax policy on the basis of an interview, a few handouts and a quick scan of a sympathetic website. But there can be little doubt as to the basic premise behind fair tax: that the nation's current income tax code is an indecipherable mess overseen by an army of 144,000 Internal Revenue System agents empowered to seize the assets of and jail those who fail to comply.

“Money is power,” Armstrong said, and he's right: Think of all the ways politicians use taxation to influence your actions or in effect punish and even discourage success by targeting successful corporations and individuals.

In an economy increasing dependent upon consumerism, wouldn't a 23 percent national sales tax – that's in addition to existing state sales taxes – throw the nation even further into an economic tailspin? Nope, insist Armstrong and other fair tax supporters.

If you can keep all of your paycheck, they point out, you'll have more money to spend. With corporate taxes eliminated, companies would stop sheltering their cash offshore, using it to create jobs here. In fact, supporters insist, studies indicate that passage of the fair tax would result in more revenue for the government, higher incomes for workers and retires and would result in increased philanthropy despite the elimination of deductions for charitable giving.

What's more, they say, the fair tax is progressive – a byproduct of the wealthy buying more stuff and so-called “prebates” – a monthly return of sales tax revenues based on the size of families.

You've got to admit, there's a certain appeal to being able to control your taxes simply by controlling your spending. What's more, Armstrong pointed out, the fair tax is consistent with the Constitution's original intent...

As I said, the fair tax is too complex to explain in a single newspaper column and it will do nothing to control spending. But the plan at least deserves a thorough congressional review and, if feasible, some kind of limited trial to test the theories behind it.

“There two types of people who oppose this: Those who don't understand it and those who do.” Armstrong said. Most presidential contenders are simply silent, but in the latter camp are those committed to the politics of envy and class warfare – the overdue elimination of which would be among the fair tax's greatest achievements.

Or, as Stutzman explained, "America isn't built on class distinctions. We believe in equal opportunity. So, instead of dividing Americans into classes and tax brackets, the fair tax treats individuals equally.”

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