Taxes & Budget

Click here to read an introduction to this article by Bob Beauprez

You can see the signs of spring everywhere – flowers blooming, baseball fans enjoying the start of a new season, the feeling that warmer weather is right around the corner – and aggravated taxpayers across the nation wasting time filling out tax forms and searching for 1099 forms.

Tax Day is here and that means stress, receipts, tax forms, and numerous spring days spent filling out government paperwork. Tax Day should be just another enjoyable spring day for each of us, and I believe that the American people are ready to replace our current convoluted system with a fair and simple alternative. The answer is fundamental tax reform in the form of the FairTax (H.R. 25).

The FairTax 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, personal consumption tax. The FairTax dramatically changes the basis for taxation by eliminating the root of the problem, income taxation, and instead taxes us only on what we choose to spend, not on what we earn. The FairTax is a fair, efficient, and intelligent solution to the frustration and inequity of our current tax system. It is the next grassroots revolution.

I encourage everyone to visit my tax reform web site at linderfairtax.house.gov and review the FairTax in detail. It is a quick read, at only 132 pages long, which stands in stark contrast to the more than 60,000 pages of tax code laws, regulations, and exemptions currently in effect.

Every American consumer pays a steep cost through the embedded costs of the current tax system in the price of everything we purchase today. When you purchase any item, you are not only paying for the cost of the item and the labor to create that product, but you are also paying the cost of the corporate and payroll taxes of each producer who had a hand in creating the product. These corporate taxes are passed along to you, the consumer, in the form of higher prices. This hidden tax is a burden, and it is a direct cost of the current tax system.

If our nation is going to grow, prosper and be successful, fundamental tax reform is critical. Tax complexity and compliance costs are on the rise and the lost productivity is undermining our economic growth. Ronald Reagan once said that "Most [tax revisions] didn’t improve the system, they made it more like Washington itself: complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high-priced legal and tax advisers." The current system is beyond repair, because politicians will always see the Internal Revenue Code as a readily available resource for their amendments and riders to provide special tax benefits for certain Americans over others. Only fundamental reform can permanently liberate our economy and the American taxpayers from this unfairness.

In addition, if we do not change our nation’s mechanism of raising revenue, our fiscal future will continue to be at risk. The Government Accountability Office stated in a recent report that if we maintain current levels of discretionary spending, and revenues remain constant as a share of GDP, then by the year 2040 the entire Federal revenue stream will not be enough to pay the interest on the debt. Under the FairTax, the number of people paying into Social Security and Medicare more than doubles from 158 million workers to 300 million Americans and 51 million foreign tourists and visitors. This will provide for the long-term solvency of the Social Security and Medicare programs currently facing enormous long-term budget shortfalls.

We need a system that is fair for every American. The FairTax will create a system that has no exemptions, no exclusions and no special advantages for one American over another. The FairTax fulfills our nation’s principles of less government, personal responsibility, and individual freedom by offering true long-needed tax relief – in the form of lower prices, nearly nonexistent compliance costs, and the ability to choose how much to spend in taxes. The FairTax makes every American a voluntary taxpayer.

Our nation has experimented with the current code for 94 years and has grown wearily accustomed to the arbitrary and unfair nature of the federal income tax system. But this is too great a nation to simply accept the fact that every aspect of our personal and business lives forever must be accompanied by the burden of an unfair system of taxation. The FairTax is a big idea that will take a great deal of passion to enact. Everyone knows that the income tax code is intrusive, complicated and burdensome, but not everyone knows yet that the FairTax will free them from this burden. And this idea will also make Tax Day just another beautiful spring day.