I Hate April 15

I hate April 15th

By Bradley Barnes

Florida District 8 Director of the Florida Fair Tax Education Association

Tax day has come and gone.  Millions of man-hours has been spent preparing these forms.  Many of the forms will have been done incorrectly, or at least, incorrectly according to the IRS. No body completely understands the 73,000 pages that make up our tax code. That’s impossible.

None the less, if the IRS thinks you have shorted them and you can’t pay what they say you owe, they can confiscate your bank accounts and auction off your home and other properties.  With the IRS, you are guilty until proven innocent.

Ironically, the IRS is shorted their collection of taxes every year.  There are billions of dollars they don’t collect every year because it’s too easy to cheat on income taxes.  The honest people end up paying thousands of extra dollars because of the cheaters.

Worse yet, we the people who do fork over the dough, also pay an estimated $400 billion dollars just complying with the tax code.  Hours spent preparing papers, lawyers and accountant fees, businesses keeping track of payroll taxes, write offs, depreciation of equipment.  The expense to comply with this tax code is enormous and draining.  The time we personally spend and businesses spend dealing with the tax code is unproductive. We could be spending that time being productive. And the $400 Billion dollars spent complying with the tax code should be extra money in our pockets!

The government estimates there is a Trillion ($1,000,000,000,000) dollars of unclaimed legal income every year that doesn’t get taxed.   Another Trillion or more of illegal income is also unclaimed.  At a 25% tax rate, that is 500 Billion tax dollars our government doesn’t get!  Our government only collected about 1.3 Trillion dollars from income tax in 2011. See how inefficient our tax collection is!

Then you have the politicians who want to tweak the tax code.  My goodness, it already has 73,000 pages, do you think more tweaking is going to help this worthless, ruthless and unbearably inefficient system!  Of course not.

So what can be done……..

It is called the Fair Tax.  This tax plan is now being looked at by the Ways and Means committee.  There are about  75 congressman, Republicans and Democrats, supporting the Fair Tax.  The people just need to speak louder and tell their congressmen they support the Fair Tax. OK, I’m getting ahead of myself.  Hopefully, many of you have heard about the Fair Tax.  Some may have heard bad things about it, but that would most likely be from people who have something to lose.  Big companies and the “rich and powerful” are most likely the ones who will lose something.  They have paid millions of dollars to lobbyists to get the tax breaks and loop holes they want, hence 73,000 pages.

The Fair Tax is really a ingenious idea.  It’s not new but has been refined and is the most researched of all tax plans. The Fair Tax is a consumption tax. Which means you only pay taxes when you spend money. Otherwise, the government doesn’t take money out of your pay check before you get to see it, NO.  You get your whole check.  The Fair Tax replaces all income taxes, capital gains taxes, estate taxes, corporate taxes, payroll taxes including Medicare and Social Security fees taken from your checks as well as the Alternative minimum tax. There will be no write offs, tax breaks or loop holes. Everybody will pay their fair share, even the ultra rich.

Let me talk about the benefits we all get from by not having to pay these other taxes.

1) No income tax, social security or medicare fees (taxes) removed from your check.

This means you get your whole check. For many of us that is 25% or more money, than we are getting now!  Even though the low income people get most if not all their income tax back, they do not get back the taxes taken from their checks for Medicare and Social Security. That is more than 7% of their income. With the Fair Tax, there will be no changes in the funding of Social Security and Medicare. Fair Tax is calculated to be revenue neutral.  Otherwise, the government will get the same amount of money as they do with the tax system today. No more, no less.

2) No capital gains taxes.

This means you can invest, and the money you make on your investments will not be taxed.  Therefore, there is no need for 401k’s, IRA’s Roth IRA’s or any other retirement plan, as these all become obsolete when there are no capital gains taxes.  Think of it.  No money taken out of your check which should leave you more to invest, and no taxes on the money you gain from investments.

3) No estate taxes.

For business people and farmers who die, their business or farm land will go to the rightful airs.  Family members will no longer have to sell the farm or business left to them just to pay the outrageous taxes the government now imposes on them.

4) No corporate taxes or payroll taxes.

You may wonder why would you let corporations off the hook and not have to pay taxes.  Two big reasons. First of all, corporations and businesses do not pay taxes. We pay those taxes, either by paying for higher priced products or earning lower wages so the companies books equal out.  Every time our government, with it’s great wisdom, raises corporate taxes, it costs us, the private sector, more money!  Who suffers the most….. the low income people.  And our corporate taxes are now the highest in the WORLD! Second, if these companies don’t pay taxes, prices will come down.  Economists estimate that prices would fall, on average 22%.  In addition, companies would save millions as they would no longer have to comply with an incomprehensible tax code.  They would not have to figure appreciation and depreciation of assets, they would not have to hire more people just to keep track of payroll taxes.  They would know where all their money is and be able to expand and hire new employees. YES……. this would cause an eruption of new jobs!  Matter of fact, the USA would become a tax haven for businesses.  So our home grown businesses that have moved many of their assets out of the country because of tax reasons would bring them back to the USA.  Foreign countries would build their factories in the USA as well, creating even more jobs. We would be able to compete better with the world markets….. economists estimate our countries exports will increase 26% in just the first year the Fair Tax becomes law.

Are you all comprehending all this.  If not, go back and read this again.

OK, how much is the Fair Tax going to cost us?  It will be 23% of what ever service or product you pay for.  If a lamp costs you $10.00, on the receipt it will have the cost of the lamp, $7.70 and the Fair Tax, $2.30.  But remember, you will have your whole paycheck, prices on average may drop as much as 22%, and the government is going to give you a monthly check called a prebate, I’ll discuss that below.  Since the Fair Tax is fair, there will not be any double taxing like the tax code we have today.  So, if you buy something used, like a car, you pay no taxes.  Therefore, you can decide how much taxes you want to pay, at least to some degree.  Buy a used car, pay no taxes. Buy a Ford Focus, pay some taxes. Buy a Maserati, pay more taxes.  Get it!  Buy a used house, guess what, no taxes.

Since the Fair Tax rate is 23%, for everybody, how is this considered fair, especially if you are a person who feels low income people should not have to pay the same percentage of tax as high income people? First off, we know that people with more money will spend more and therefore, pay more taxes.  But if the rich and poor all pay 23%, is that really fair? I personally don’t think that is completely fair, and neither did the people who created the Fair Tax.  They didn’t feel anyone should have to pay taxes on bare essentials, like food, shelter, heating, etc.  So they decided every family would get a check from the government at the first of the month (prebate) to cover the taxes they would have spent up to the poverty level.  Let me give you an example to explain this better.

Our government figures the poverty level every year.  For 2012, the poverty level for a family of 4 was $30,300.  That means that under the Fair Tax, the government would pre-pay every family of four, the taxes they would have to pay up to $30,300.  At a tax rate of 23%, that is $6969 for the year or a monthly check of $580.75, for every family of four.  Lets say Joe’s family of four only earns $30,300 per year.  Joe would then pay no taxes at all, because he would have been pre-paid the cost of his taxes he pays on spending that $30,300.  Fred has a family of four, but earns $60,600.  He would pay zero taxes on the first $30,300 and 23% tax on the second $30,300.  That means he’d pay 11.5% in taxes, if he spent all his money.  If a family of 4 earned $121,200 (4 times the poverty level) and spent every penny, their tax rate would be 17.25%.  Therefore, the tax is progressive, the more you make the higher percentage of taxes you will pay.  However, everybody that pays taxes, will pay less taxes under the Fair Tax.

Let me cover one more of the main points the Fair Tax.  If you think about it, you should be wondering, “how is everyone going to pay less taxes if the Fair Tax replaces income tax, capital gains tax, corporate tax, payroll taxes and the Medicare and Social Security fees”?  That doesn’t seem possible.  Well if you remember what I said above, that there is over 2 Trillion dollars of income, some legal and some illegal, that is not being claimed as income and therefore the Federal government cannot collect taxes on it.  With the Fair Tax, every time someone spends money, they get taxed.  So if you are a drug dealer and spend some of your illegally acquired money on a TV, or clothes or dinner at a restaurant, you will now pay your fair share of taxes.  So with the Fair Tax, there are no cheaters (or very few compared to today’s tax system) no loop holes, no tax breaks. So everyone pays their fair share and you will pay less than you are now.

In conclusion, our money will go farther with the Fair Tax.  Even though we pay 23% on all services and new products, we get our whole check, we all get a prebate every month and prices will drop an average of 22% across the board. We will save faster since we will have more money to invest and none of our investment money will be taxed. There will be an explosion in new jobs like never seen before.  It will be easier to become a successful business owner. The people will prosper, the country will prosper and our nation will once again be the leading economy in the world.

Please go to Fairtaxnation.com or Fairtax.org to sign up as a supporter of the Fair Tax. Here you will find more information to your questions.

I am Dr Bradley Barnes, the Florida District 8 Director of the Florida Fair Tax Education Association, and wish you success and happiness.