Bonnie Alba
February 21, 2008
FairTax, here to stay
By Bonnie Alba

More citizens are joining the millions already on the FairTax bandwagon and should. We've all known for decades that the antiquated and overburdened U.S. tax system needs to be reformed. The FairTax is not a reform of the present 67,000 pages of tax code. It is a complete replacement tax system based totally on consumption.

The first book by talk-radio show host Neal Boortz and House Rep. John Linder (GA.), "The FairTax Book," was a solid attempt to spread the word across the nation that there is a concerted and well thought out plan to replace the present system. It's been in the making since 1995.

What's unique is the FairTax is working its way from the bottom up through the grassroots FairTax movement and from the top down through two congressional leaders. At the grassroots level, FairTax is moved solely by volunteer citizens. The congressional bills, H.R. 25, sponsored by House Rep. John Linder and S.R. 1025, sponsored in the Senate by Sen. Saxby Chambliss (GA.), are slowly attracting cosponsors and supporters.

The recent release of the second book by the same authors, "FairTax: The Truth, Answering the Critics," disarms those critics who want to discredit the FairTax. The book also educates those who have questions. The more we citizens know about the FairTax, the less effect the critics will have in attacking the FairTax plan or portraying it as something it's not.

I'm not a CPA or tax lawyer, but if I can understand the FairTax, then you can too.

When I talk to people about the FairTax, the question most ask is "What about the mortgage interest deduction?" You should be happy to get rid of it.

If you have ever itemized deductions on your 1040 tax form, you know that you choose either the Standard Deduction or itemize your deductions on Schedule A.

The 2007 1040 Standard Deduction is $5,350 (singles) or $10,700 for married couples filing jointly. Do you have more than $10,700 in itemized deductions? Then you would itemize to gain more deductions on your taxes.

This is a moot point since, according to Boortz, 70 percent of taxpayers do not take advantage of the mortgage interest deduction for tax purposes. Under the FairTax, we wouldn't have to agonize over it, since there are no forms to fill out..

Another question most people ask: "Won't this add 30 percent to the price of everything we buy?"

The simplest fact about the FairTax that is most distorted or outright lied about is that the FairTax is a National Sales Tax ADDED to the price of everything we buy. WRONG!

This cannot be stressed enough. The FairTax is an estimated 23 percent "Embedded" tax in the price of new goods and services. The price you see is what you pay and nothing is added (except for state sales tax) at the register.

With the elimination of taxes on businesses and corporations, this means they would no longer collect the estimated 22 percent embedded tax on all goods we buy now. (Did you know you were paying corporate taxes?) Instead, the 23 percent embedded FairTax would take its place. Yet you, the consumer, will be paying about the same for all products and services that you pay for now.

One example of a critic so wrong: Bruce Bartlett, former Deputy Assistant Secretary of the Treasury for Economic Policy (1988-1993), wrote an article for the Wall Street Journal , in which either he did not do his homework. See my rebuttal and the more knowledgeable Neal Boortz' rebuttal

Other reasons the FairTax would make us happy include the elimination of the large government bureaucracy, the IRS, and the horde of lobbyists trying to influence tax legislation. Both would disappear. It would take a heavy tome to cover the minimum benefits and harmful effects that lobbyists and special interests have had in influencing legislators on tax laws over the decades.

Now, think! Under the FairTax, No More federal tax forms to struggle over; No More saving those tax receipts; No More federal proofs of income; No More time or money spent on fulfilling IRS expectations; No More anxiety or sleepless nights that you might have filled out your tax form wrong and the Big Bad IRS will come after you.

On a Happy Note: What you do get to do is take home all the money you earn with no withholding of federal and payroll taxes.

My suggestion: Read both books. The FairTax is here to stay.

© Bonnie Alba


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
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Bonnie Alba

Bonnie Alba is a "politically incorrect" researcher-writer. Since 1995, her articles have appeared in California newspapers. Previously she served in various Department of Defense positions for over 16 years... (more)


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