A fair tax for progressives and conservatives
By Thomas M. Sipos
The income tax has four detriments: (1) We are forced to pay money to the government; (2) filing the tax forms invades our privacy, forcing us to reveal how much money we have, how we got it, how we spent it; (3) it's a hassle to keep records, then hire accountants or attorneys to make sure we filed correctly "under penalty of perjury"; and (4) the exemptions and deductions discriminate against gays, singles, childless couples, and others based on spending and lifestyle choices.
Conservatives and progressives both insist that taxes are necessary. (Conservatives are supposedly anti-tax, but how else would they pay for their global, decades-long "war on terror?") But let's suppose they're right. Wouldn't it be better if the feds could collect that money without invading our privacy or fostering discrimination (issues that progressives supposedly care about), and without hassling people with burdensome record-keeping and form filing?
If you agree, the answer is to replace all federal taxes with a national sales tax (aka the Fair Tax, not be confused with the Flat Tax, which is merely a variation on the income tax). This one national sales tax could replace federal income, payroll, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.
How high must a national sales tax be to replace all those? FairTax.org estimates 23 percent (on top of state and local sales taxes). That sounds like a lot of extra money to pay at the store each time you shop. But the average person now pays 33 percent of his or her income to taxes (Tax Freedom Day came on April 30 in 2007, according to TaxFoundation.org). A 23 percent sales tax isn't much to abolish all federal taxes. It still leaves you 10 percent for state and local taxes.
Consider the benefits:
* No invasion of privacy. No record-keeping or filing with the IRS. No audits.
* No tax attorneys or accountants to hire. More money for you.
* Transparency. You'll see what you and everyone else pays. That's bad for those who want higher taxes -- hidden taxes are easier to raise -- but good for those who value an informed democracy over smoke-filled, backroom deals.
* No discrimination. Straight singles and gays complain that marriage currently brings tax benefits denied to them. Childless couples complain that tax laws favor couples with children. A Fair Tax won't end the culture war, but it'll lower the volume.
* Isn't a sales tax unfair to poor? No. The plan proposed by FairTax.org provides a "monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level."
* Won't you lose your deductions? Yes, but so will everyone else. I realize that your deductions are justified, whereas everyone else's are "special interest loopholes," but you've got to give a little to get a lot.
* Won't tax attorneys and accountants lose their jobs? Some. If that's your concern, let's make the tax code even more burdensome.
* Won't IRS agents go hungry? Never. They'll be redeployed to policing the new sales tax. Since there are fewer retail stores than individual taxpayers, the ratio of agents to tax filers would improve.
* Less cheating. Not only will there be more IRS agents per tax filer, but there will be fewer taxpayers overall. Ever get mad because others were cheating, while you were too scared, and it just wasn't fair? Under a Fair Tax, your neighbors can't "beat the system" and leave you to pick up Uncle Sam's tab. Feel better?
* Won't this burden stores with additional record-keeping? Not much. Most stores already keep records for state and local sales taxes, plus various corporate and business taxes, some of which will be eliminated.
* Won't lobbyists lose their jobs? Yes. Corporations will no longer hire six-figure lobbyists to bribe Washington politicians to create tax "incentives" (i.e., loopholes). It's very sad.
* Won't this mean fewer contributions to politicians? Yes. If they're unable to create tax loopholes, fewer people will want to bribe them. Very, very sad.
* Wouldn't eliminating all those filing requirements make it harder for the government to monitor terrorists, drug lords, and other Bad People? Yes, but in a free society, it's supposed to be hard for the government. That's why we have the Bill of Rights and search warrant requirements. I realize Red Chinese cops have it easier.
Most of these points are my own. I plucked some stats from FairTax.org, but I don't speak for them, nor they for me. What's important is that you speak to everyone, from talk radio hosts to your elected representatives, and explain the benefits of the Fair Tax to them.
Thomas M. Sipos edits California Freedom, the state newspaper of the Libertarian Party of California. His website: http://www.CommunistVampires.com.