Working on making April 15th just another day

I am a big fan of efficiency and consequently am for the elimination of the U.S.’s egregious and cryptic income tax code. I really like the FairTax (HR 25 and Senate bill 1493) which calls for taxing spending rather than income. Basically, all income taxes would be eliminated and you would pay a fair tax on the goods and services you purchase. This is a great system for rewarding saving and investing, instead of consumption, while maintaining the same amount of revenue to fund our government.

Check out the FAQ for the FairTax. The FAQ does a great job of answering questions that come to mind when contemplating the FairTax and its ramifications, especially in regard to its fairness, implementation, and level of compliance that can be achieved.

“The FairTax is a non-partisan proposal (HR 25/S 1493) that abolishes all federal income taxes, including personal, estate, gift, capital gains, alternative minimum, corporate, Social Security, other payroll, and self-employment taxes, and replaces them all with one simple, visible, federal retail sales tax. The FairTax dramatically changes the basis for taxation by eliminating the root of the problem: Taxing income. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. The FairTax is a fair, efficient, and intelligent solution to the frustration and inequity of our current tax system.”

I e-mailed all the major presidential candidates requesting their support of the FairTax. You should too! We can save ~$250,000,000,000/year on compliance alone, i.e. tax return preparation and such. Let’s make April 15th just another day!

4 thoughts on “Working on making April 15th just another day

  • August 19, 2004 at 3:56 pm

    I like this idea. I’ve always been in favor of a simpler tax system that anyone could understand. The only drawback I can see is that some people would be less likely to buy luxury items and more likely to save their money. This could result in a sluggish economy. I mean, buying a new plasma tv for $3,000 and then paying $900 in tax is a bit of a downer. Is their any chance of this ever getting off the ground? What politicians have shown support for this?

  • August 19, 2004 at 4:21 pm

    Luxury items would have about the same cost with an income tax and a spending tax. For example, John taxpayer decides to buy a $3000 plasma TV. Under the existing income tax code (assume John is in the 27% tax bracket), he has to make $4109.59 to have $3000 after taxes. Therefore the total cost of the plasma TV is ~$4110. Under the new spending tax John’s cost is $3000 + 23% tax, which is ~$3690. I think it is just a matter of education. Instead of paying tax immediately on income you pay it when you buy an item. This also helps people realize the true cost of their purchases, which might slow the economy slightly. However, the benefit is a much more stable economy with less debt and more savings, which is better in the long run.

    Some politicians on both side of the aisle support the FairTax, but the movement is mostly grassroots. This is an issue we can help along by educating people and talking about it.

  • August 19, 2004 at 4:37 pm

    I agree it’s all about education. It would just take some getting used to.

  • August 19, 2004 at 4:46 pm

    I like the idea on a personal basis – but it might put me out of a job :(
    But then no income means I can buy nothing which in turn means I pay no tax :)

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