I can only speak about the federal legislation to replace the income tax system. Right now the first bite of the fruit of our labors--our earnings-- belongs to the federal government. On average, people pay about 30% of what they earn in income taxes and FICA payroll taxes. Even more is paid at the retail level because the system hides income taxes in retail prices--up to 20% of the price. The national FairTax bill allows wage earners to take home everything they earn, without federal withholding or payroll taxes. At most, people will pay 23% of what they spend. Individual consumption decisions provide taxes for the common good under the FairTax. Even better, federal taxes are no longer hidden from the public through withheld payroll taxes (FICA)or income tax withholding. A tax system that can't be understood, costs $300 billion a year to obey and which hides the true cost of federal spending decisions is hardly a prescription for self-determination by American citizens--or liberty. Everyone pays under the national FairTax, broadening the tax base, including illegal immigrants on one end of the spectrum and billionaires on the other end, as consumers. Those who spend more, pay more. There are no Congress-granted gimmicks or loopholes for the influential or wealthy. The $1.5 trillion annual underground economy becomes part of the national tax base allowing almost everyone to pay less. The monthly FairTax prebate check is deliberately designed to reimburse every penny of the FairTax paid by poverty level and below families. The same amount however, by family size, goes to every American household. The closer one is to povertyy level, the greater effect on annual taxes. This also means that the tax paid on the necessities of life is reimbursed monthly--to everyone. The Fairtax eliminates the highly regressive tax on the poor, FICA taxes. It eliminates all taxes on upward mobility. The FairTax shifts taxes from what goes into our economy--work, savings and investment--to what comes out of the economy--consumption. Because business taxes are always paid by consumers in the form of higher prices or depressed wages, the FairTax eliminates business taxes. Respected economists say the elimination of the corporate tax, alone, will pull $12-$15 trillion dollars of private investment, now offshore, into our economy. That means jobs, better benefits and a new era of American growth. It is not money borrowed against our children's earnings. Both Republicans and Democrats in Washington resist the FairTax because it ends Congress' ability to corrupt the tax system with favors. The FairTax is very good for the nation but very bad for tax lobbyists and those who trade tax breaks for contributions. For this reason, most in Congress hate the idea. Liberty? Many think the FairTax can restore the proper relationship between citizen and government by making both government taxing and spending decisions visible and subject, once again, to the will of the majority. Right now, both are hidden from plain view because taxes are withheld and embedded in retail prices and because government spending seems divorced from what comes out of our paychecks.
Yes, the FairTax seems Republican and conservative because of the few Members of Congress who support it (55) all but one are Republicans. This is a great frustration to those of us who know that nothing would more help the poor or the middle class. We actually believe that this issue can unite the left and right against the self-dealing of Congress and the self-interest of tax lobbyists and those who serve on tax writing committees.
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