THE FAIR TAX
December 13, 2006
Our current tax code is an abomination, and we desperately need change, says Walter E. Williams, a faculty member of George Mason University:
- The time Americans spend simply complying with our tax code comes to 5.8 billion hours of record-keeping, filing taxes, consulting, legal and accounting services.
- Breaking those hours down to a 40-hour work week, it translates into a workforce of 2.77 million people; that's more than the workforce of our auto, aircraft, computer and steel manufacturing industries combined.
The Fair Tax bill was introduced in both the U.S. House of Representatives as H.R. 25 and the U.S. Senate as S.25. Rep. John Linder plans to re-introduce the bill next year.
- If enacted, the Fair Tax would eliminate the federal individual income tax, alternative minimum tax, corporate and business taxes, capital gains tax, Social Security and Medicare taxes, and estate and gift taxes.
- These taxes would be replaced by a 23 percent sales tax on all goods and services sold at the retail level.
- The Fair Tax would be revenue-neutral in the sense that it would replace the revenue from current federal taxes; thus, it would change the way government is funded.
The Fair Tax has much to recommend it, such as being a more efficient form of taxation. It would go a long way toward protecting our privacy and preventing Congress from using the tax code to micromanage our lives. The Fair Tax is an excellent idea, but only under three conditions, says Williams:
- The repeal of the Sixteenth Amendment that created the income tax.
- A provision fixing the tax at, say, 23 percent.
- A constitutional amendment mandating that a tax increase requires a three-fourths vote of Congress.
Source: Walter E. Williams, "The FairTax Book," Townhall.com, December 13, 2006.
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