By Mildred Robertson
April 17th is quickly approaching as Americans gather their pay stubs, calculate their charitable giving and prepare to ante up their annual and much-dreaded payment to the Internal Revenue Service (IRS). Apparently, Republicans profess to feel your pain and want to eliminate the need to file with the IRS. Among their top priorities is to dismantle the IRS and replace it with what they refer to as “The Fair Tax Act”. This proposal would eliminate income, payroll, estate, and gift taxes generally known as a progressive taxing system and would replace them with a 23% national sales tax.
That may sound enticing to some who
dread the annual ritual of calculating taxes and paying up to Uncle Sam. But in reality, this proposal would place a larger burden on the average American.
According to CBS news, The bill, HR25, would eliminate all individual
and corporate income taxes, capital gains, payroll taxes and estate taxes while
imposing a 23% sales tax on goods and services. However, tax experts point out
that the way the tax is calculated, Americans would pay closer to 30% more for everyday purchases.
Without getting too far off in the
weeds, there are several ways to calculate taxes. The Republican plan would
charge the same rate of taxes on everybody for everything. Sounds fair right?
That assumption could not be more mistaken,
at least not in a democratic society. Our
current tax system reduces the tax burden on low-wage earners so that they can afford
essential goods and services, which helps stimulate the economy.
So, what does “The Fair Tax Act” mean
in real life? It means the standard and itemized deductions that reduce your
tax rate would be eliminated.
John Buhl, a researcher at the Tax
Policy Center says many Americans, particularly those in the middle class, will
see a sizable increase in their tax burden. While lower-income households could benefit
from what he calls “prebates”, depending on family size and income, the
wealthiest of the wealthy would be the primary benefactors of the Republican
plan.
The regressive Republican tax proposal
would increase the tax burden for essential goods and services on low-income
taxpayers who could least afford to pay it, while high-income taxpayers would bear
a relatively small tax burden. Ultimately the greatest burden would fall
on moderate- to low-income households, causing them to spend a much higher
percentage of their income on essential items necessary to survive.
While our current tax system
buffers the cost for low- and moderate-income households, the regressive tax
system proposed by Republicans would lessen the burden on high-income
households while shifting the burden to those least able to bear the cost.
If you believe in a fair and
equitable system of taxation, contact your representative to learn more about “The
Fair Tax Act.” See how it will personally affect you and others like you.
Encourage them to vote for an equitable system of taxation that will provide
for our nation’s needs while allowing average Americans to fairly contribute to
this nation’s upkeep without depriving them of the income necessary to sustain their
households.
To find your representative go to: https://www.house.gov/representatives/find-your-representative,
or call the House switchboard at 202-224-3121.
3 comments:
Just once I would love to see a piece written on the FairTax that was a fair assessment of what it is and what it would do, rather than this sort of partisan hit piece.
The FairTax has been studied in depth for over a decade and it has been shown that it would reduce the tax burden on the lower end of the wage spectrum. Anyone that wants to know what the real story is can do a bit of research and find out for themselves.
A good place to start would be the FairTax website. Here is a link to an article that breaks down the difference in the tax burden between the FairTax and the current system.
https://www.fairtax.org/articles/the-chairmans-report-february-10-2023
Granted, this article is by a strong proponent of the system so it would be a good idea to fact check it as well as the article that I am responding to. Look it up on Wikipedia; they give it a more fair hearing than this article.
It seems that the biggest problem that the left has with the FairTax is that it would remove a lot of their ability to use the income tax code to manipulate businesses and individuals and play their class warfare games.
Unknown: Clearly, our tax code is complicated, and any changes to it will be equally complicated to unpack. I am not an economist, but my studies indicate that regressive tax systems place a larger burden on the middle class. I believe there are some aspects of this legislation that attempt to lift some of the burden from the lowest-income citizens. That leaves the heaviest burden on the middle class, the economic engine of the country. This is, of course, my opinion. That is why I suggested that readers should contact their legislators to gain more in-depth information about the proposed legislation.
The FairTax bill is also readily available online. I would recommend anyone that is interested in the subject give it a once over.
The prebate provision in the legislation completely untaxes those at the lowest end of the economic spectrum and graduates the effective tax rate up from there. Here is a link to a prebate fact-sheet that should help explain how that would work.
https://flfairtax.org/wp-content/uploads/2021/02/2021-FairTaxPrebateSchedule-effective-tax-rate-chart-one-pager-FEB-2021-Copy.pdf
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