Over the years there have been a number of proposals to scrap the current tax program for plans promoted as fairer to all, better for the economy and providing necessary revenue for government services. Most memorable in recent history is the Steve Forbes Flat Tax plan introduced in the 1996 presidential campaign.
Now there is another plan that is gaining momentum and sponsors that totally revolutionizes the way tax revenue is collected in this country. In the process it promises to access the underground economy (black-market, under the table sales, illegal income etc.), reduce the tax burden on everyone while providing funding for existing government services.
The current system depends on a system of deductions and exemptions to “reward” and motivate the population to specific actions such as investing, home ownership and business ownership. The system also promotes class warfare and provides a means for politicians to reward voters for their support. The problem is they are doing this with your money, not theirs or the “government’s.” Government produces no income, it only takes it. So they only reward you with what is already yours, in the process the cost of government and essential services, as well as the overall cost of doing business and ultimately consumer purchases increases enormously. It is estimated that by the time products and service reach the consumer taxes have inflated the cost by 20-30%.
To eliminate the politicizing of taxing, streamline the process and thereby reduce the associated compliance costs to business and individuals, spread the burden fairly and ultimately reduce the cost to the taxpayer Americans for Fair Taxation is proposing the Fair Tax Act of 2003.
Currently in committee the bill has 44 co-sponsors and proposes to turn the current system upside down. In a nutshell, it will eliminate the current tax code, all 10,000 pages with 100,000’s of pages of supporting documentation. It will reduce the costs of compliance by collecting the tax at only one level, compensating those businesses for doing so. Tomorrow I’ll go into some of the basics of the plan and provide links to supporting research.