Below is an open letter to the President, the Congress, and the American people concerning reform of the Federal Tax Code from economists and educators in the United States. For those unfamiliar with The Fair Tax, this letter will give you a good overview of it. The letter can also be found at FairTax.org. Please share it with others.
The notion that increasing taxes will increase revenue is bogus. Winston Churchill nails it with this famous quote, “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
There are examples in the United States that demonstrate that revenues increase by lowering taxes, and decrease by raising them. There is an optimum point in the taxes/revenue equation and it has a name. It is called the Laffer Curve.
Since classical economic theory back in the early part of the 20th century economist have always known about money circulation. What is referred to as velocity. The faster money goes through the economy the more money people make and the more taxes are collected. Since then the equations have gotten a lot more complex with partial differentials, regression analysis and other mathematics. The principals are the same. The faster the economic activity the more jobs, income and taxes.
So how do we get a faster economy? There has to be some tax rate that allows maximum tax collections right? Yes there is. Arthur Laffer took a simple business principal studied by millions of business majors the world over. The maximum profit point or maximum revenue point. It the point where the price of your Chevy trucks makes you the most profit. Charge too much and you lose customers. Charge to little and you lose money. It’s not that complex. Disney does it for ticket prices. Walmart does it for their store pricing policies. All business does it. So why when Arthur Laffer does this same thing for government maximum revenues is he ridiculed for “trickle down,” “Voodoo” and other names too discredit his theory?
By understanding the Laffer Curve and the adoption of the Fair Tax, you will easily see how beneficial and growth oriented the Fair Tax would be to the economy.
Please check it out.
Link: Fountainhead Zero: Taxes 101: The Laffer Curve
Former Arkansas Gov. and Presidential candidate Mike Huckabee will be coming to Pensacola Friday night. Huckabee is a supporter, a passionate supporter, of the Fair Tax. It will be for a book signing of his new book ‘Do the right thing.’
Even if you’re not interested in his book, but you support the Fair Tax, how about showing up (you know the media will be there) to thank Gov. Huckabee for making the Fair Tax part of his campaign platform as well as his continued support of it.
He will be at the Barnes & Noble on Airport Boulevard between 8-9pm. If you can’t make it, you can get the book here.
This will be his last stop of a five city trip on Friday.
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.
Do yourself a favor and get educated on The Fair Tax. The Fair Tax is the result of $22 million worth of research by credible economists from around the country whose task was to come up with another way to fund the operations of the country. The task was qualified to the extent that the result would be ‘revenue neutral.’ That is to say the system must be able to generate as much money as the government is currently generating with the current system through federal withholding and payroll taxes, self-employment taxes, alternative minimum tax, estate and gift tax, and capital gains tax, all of which would be replaced by the Fair Tax. And from that point as the economy grows, so grows the treasury. It is a pro-growth, as opposed to punitive growth, taxing system.
Consequences paramount to converting to the Fair Tax system are three-fold.
First, your individual take-home pay increases dramatically. Without the federal withholding and payroll taxes being deducted from your pay, you get all your pay in every paycheck. This alone is the biggest stimulus to your personal economy as well as our national economy. And it doesn’t put the nation further into debt in the process. Because the taxing revenue is generated by consumption, the tax base includes everyone who buys anything new, not just the working people in America. ‘Everyone’ includes citizens and non-citizens including illegals, foreign diplomats and tourists. And because it is a sales tax, the so-called underground economies are no longer exempt from contributing. Everyone will contribute to funding the government and our Social Security, Medicare and other entitlement programs.
Secondly, it takes the ‘tax hammer’ away from politicians who use it to control every aspect of our lives and business and industry in the United States. It transfers the power from Washington politicians directly back to you. It is this stripping of power from the political class that generates the most objection from the political class, and the most outrageous criticism and unfair demagoguery, of the Fair Tax. Under the Fair Tax, our politicians will be left with nothing to do except their job of governing and living within their means, just like you and I have to do. And since filing of your personal income taxes will cease, April 15th becomes just another day to enjoy life, liberty, and the pursuit of happiness.
While it is still fresh in your memory, take a look back at the presidential campaign and the amount of press and attention that was given to taxation by both candidates. Besides energy, the other topic was ‘my tax plan is better than your tax plan.’ And polarizing political tactics like class envy and class warfare became all too prominent. Absent tax laws to talk about, the voters would have learned more about the candidates and ‘the real issues.’
Third, but certainly not last, the change to the Fair Tax alone would bring back foreign-held capital, estimated at between $10 to $15 trillion, that economists predict will flow into the US economy with enactment of the FairTax. That is trillions of dollars of business that has fled this country because of its taxing system, the second highest in the world. As an added bonus, companies looking to do business in the United States that have not yet come here, would have the incentive to come here. The job creation and wealth creation associated with it will spur the economy more than any tax-and-spending Democrat or Republican in Washington could dream of.
- Fair Tax
- Fair Tax Calculator
- About the Fair Tax
- Video – Fair Tax FAQ
- What the federal tax system is costing you besides your taxes!