"Get'Er Done" Economists Nationwide endorse the FairTax Plan
HOUSTON, April 12 U.S. Newswire -- More than 75 economists nationwide endorsed the FairTax in a letter delivered to the House, Senate, Treasury, tax reform panel and the President today.
Tom Wright, executive director of FairTax.org, stated, "Nearly seven months ago an idea was born in the mind of a FairTax supporter who is an economics professor at the University of Virginia's College at Wise. He wants the broad public to know just how many economists have examined and recommend the FairTax plan. That idea became a project that has finally come to fruition. Over 75 economists, one of whom is a Nobel Prize winner, have now endorsed, specifically, the FairTax HR 25 and S 25, in writing. We call this a direct validation of our more than $22 million in academic and market research completed over the past 10 years. This economist endorsement letter was delivered to the offices of every single tax aide on Capitol Hill this week. We also made sure the President, his tax panel, and Treasury Secretary Snow had a copy. This letter further evidences the fact that Americans realize the inefficiencies of the current system and see the FairTax, HR 25 and S 25, as the proper replacement."
David L. Kendall, Ph.D., professor of economics and finance from the University of Virginia's College at Wise, stated, "I support the FairTax -- and I asked other economists to join me with their support -- for a very simple reason: The FairTax offers Americans substantial and very real advantages over the income tax system we have now. Our federal income tax system is inefficient, far too costly, and simply not the best way to pay for government. I think all Americans are dismayed, outraged, and disgusted that our federal tax code contains millions of eye- glazing words spread across more than 60,000 pages. We all know it's a disgrace, and we all know it must be changed. Like most economists, I know that our income tax system slows economic growth, discourages work, and encourages current consumption over saving -- saving that is needed to spur economic growth, which creates more jobs. Most economists agree that a consumption tax is less costly and more efficient than an income tax. Simply put, that's why I support the FairTax and that's why other economists endorsed my letter."
Wright added, "The income and payroll tax systems are job- destroying travesties. Not only does the American public have the political will to replace them, the FairTax plan is viable (ask Texas and Florida), historically proven (ask the Phoenicians), acceptable (ask American voters), and now, endorsed by economists nationwide. The FairTax offers long-needed simplicity, efficiency, and fairness to all Americans by eliminating the income and payroll taxes. FairTax.org with a membership and supporter base of almost 600,000 strong is dominating the tax reform battle with thousands of American taxpayers' voices demanding relief."
Laurence Kotlikoff, Ph.D., chair of the economics department at Boston University, and co-author of The Coming Generational Storm, has stated, "Our tax code is a mess for a reason. Special interests pay for special favors. And with thousands of pages and counting, there are plenty of places for our politicians to hide the kickbacks. Meanwhile, all the exemptions, deductions, exceptions and special provisions reduce the tax base, which means higher tax rates and smaller incentives for individuals and companies to produce income. And whether the tax breaks are set in fine print or spelled out in bold type, they generally favor the rich, making our tax system less progressive than is generally believed. No tax system is perfect, but ours is so awful that fundamental reform is the only option. Fundamental reform is not just a necessity, it's also an opportunity to stop taxing income and start taxing consumption. My colleagues and I have been studying income and consumption taxation via computer simulations for some time now. We've found that switching from taxing wage and capital income to taxing consumption can significantly improve economic efficiency and growth. What's more, it can make our tax system much more progressive and generationally equitable. Fundamental tax reform is long overdue. Consumption taxation is the way to go."
Wright thanked the volunteers who organized the effort to inform economists and asked for their input on the FairTax legislation by stating, "FairTax.org is a grassroots organization. Nearly 50,000 really active volunteers across the country are rallying behind the FairTax bill for various reasons. We thank Dr. Kendall and his efforts on behalf of the FairTax legislation and the economic principles it encompasses. HR 25/S 25 is the answer for our income and payroll tax burden. It is open, accountable, simple to understand, and fair to all Americans." Added Wright, "No loopholes, no exceptions, and no American pays any federal taxes -- hidden or obvious -- up to poverty level consumption. This letter is an historic milestone for the FairTax concept. It coincides nicely with Federal Reserve Chairman Greenspan's comments and the good words by esteemed economist Milton Friedman when testifying before the President's tax reform panel in favor of consumption taxation. We believe after more than a decade of work, over $22 million dollars and hundreds of thousands of volunteer actions, our time is coming and the American people are fast becoming ready for the full tax replacement alternative - the FairTax."
View the letter in its entirety at http://www.fairtax.org/eco_endorsements.html or you may request a copy of the letter by fax or e-mail by calling Gloria Garza at 1- 800-FAIRTAX ext. 106 or e-mailing gloria@fairtax.org.
What is the FairTax plan?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax, a rebate to ensure no American pays federal taxes up to the poverty level, dollar-for-dollar revenue neutrality, and the repeal of the 16th Amendment. This non-partisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple, visible, federal retail sales tax - collected by existing state sales tax authorities. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. So it is also cost neutral -- the final cost for goods and services changes little under the FairTax. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
What is Americans For Fair Taxation (FairTax.org)?
FairTax.org is a non-profit, non-partisan, grassroots organization dedicated to replacing the current tax system. The organization has hundreds of thousands of members and volunteers nationwide. Its plan supports sound economic research, education of citizens and community leaders, and grassroots mobilization efforts. For more information visit the web page: http://www.fairtax.org or call 1-800-FAIRTAX.
April 15th can become a day just like any other with no complicated tax forms; no wasted hours in tax preparation and compliance and no more tax code for lobbyists to take advantage of.
The Presidents Tax Reform Panel has met several times and is beginning to see the economic drag that the current tax system puts on our economy. Their latest press release indicates that the panel just can't tinker with the current code and solve all we need to solve.
Democrats are seeing the tremendous pain their constituients are feeling with the alternative Minimum tax or AMT. But what can provide a revenue neutral replacement? The FairTax!
American Manufacturers and Unions see that our tax code makes them less competitive in the world market.
The Fair Tax eliminates the AMT, income tax, capital gains, payroll taxes while providing enhanced tax savings for mortgage holders;home owners and for charities.
The FairTax solves all those problems and much more. Those that know the Facts Love the Fair Tax. Read more at www.fairtax.org
The Fair Tax Legislative package is fully researched and in full legislative form as House Bill HR25 and Senate Bill S25. Nationally known economists agree it is the best option for our country so as Larry the Cable Guy says "Let's Get'ER Done! Call your Congressmen and tell them you support HR25/S25 as a 2005 priority. The next April 15th can just be another spring day!
Tom Wright, executive director of FairTax.org, stated, "Nearly seven months ago an idea was born in the mind of a FairTax supporter who is an economics professor at the University of Virginia's College at Wise. He wants the broad public to know just how many economists have examined and recommend the FairTax plan. That idea became a project that has finally come to fruition. Over 75 economists, one of whom is a Nobel Prize winner, have now endorsed, specifically, the FairTax HR 25 and S 25, in writing. We call this a direct validation of our more than $22 million in academic and market research completed over the past 10 years. This economist endorsement letter was delivered to the offices of every single tax aide on Capitol Hill this week. We also made sure the President, his tax panel, and Treasury Secretary Snow had a copy. This letter further evidences the fact that Americans realize the inefficiencies of the current system and see the FairTax, HR 25 and S 25, as the proper replacement."
David L. Kendall, Ph.D., professor of economics and finance from the University of Virginia's College at Wise, stated, "I support the FairTax -- and I asked other economists to join me with their support -- for a very simple reason: The FairTax offers Americans substantial and very real advantages over the income tax system we have now. Our federal income tax system is inefficient, far too costly, and simply not the best way to pay for government. I think all Americans are dismayed, outraged, and disgusted that our federal tax code contains millions of eye- glazing words spread across more than 60,000 pages. We all know it's a disgrace, and we all know it must be changed. Like most economists, I know that our income tax system slows economic growth, discourages work, and encourages current consumption over saving -- saving that is needed to spur economic growth, which creates more jobs. Most economists agree that a consumption tax is less costly and more efficient than an income tax. Simply put, that's why I support the FairTax and that's why other economists endorsed my letter."
Wright added, "The income and payroll tax systems are job- destroying travesties. Not only does the American public have the political will to replace them, the FairTax plan is viable (ask Texas and Florida), historically proven (ask the Phoenicians), acceptable (ask American voters), and now, endorsed by economists nationwide. The FairTax offers long-needed simplicity, efficiency, and fairness to all Americans by eliminating the income and payroll taxes. FairTax.org with a membership and supporter base of almost 600,000 strong is dominating the tax reform battle with thousands of American taxpayers' voices demanding relief."
Laurence Kotlikoff, Ph.D., chair of the economics department at Boston University, and co-author of The Coming Generational Storm, has stated, "Our tax code is a mess for a reason. Special interests pay for special favors. And with thousands of pages and counting, there are plenty of places for our politicians to hide the kickbacks. Meanwhile, all the exemptions, deductions, exceptions and special provisions reduce the tax base, which means higher tax rates and smaller incentives for individuals and companies to produce income. And whether the tax breaks are set in fine print or spelled out in bold type, they generally favor the rich, making our tax system less progressive than is generally believed. No tax system is perfect, but ours is so awful that fundamental reform is the only option. Fundamental reform is not just a necessity, it's also an opportunity to stop taxing income and start taxing consumption. My colleagues and I have been studying income and consumption taxation via computer simulations for some time now. We've found that switching from taxing wage and capital income to taxing consumption can significantly improve economic efficiency and growth. What's more, it can make our tax system much more progressive and generationally equitable. Fundamental tax reform is long overdue. Consumption taxation is the way to go."
Wright thanked the volunteers who organized the effort to inform economists and asked for their input on the FairTax legislation by stating, "FairTax.org is a grassroots organization. Nearly 50,000 really active volunteers across the country are rallying behind the FairTax bill for various reasons. We thank Dr. Kendall and his efforts on behalf of the FairTax legislation and the economic principles it encompasses. HR 25/S 25 is the answer for our income and payroll tax burden. It is open, accountable, simple to understand, and fair to all Americans." Added Wright, "No loopholes, no exceptions, and no American pays any federal taxes -- hidden or obvious -- up to poverty level consumption. This letter is an historic milestone for the FairTax concept. It coincides nicely with Federal Reserve Chairman Greenspan's comments and the good words by esteemed economist Milton Friedman when testifying before the President's tax reform panel in favor of consumption taxation. We believe after more than a decade of work, over $22 million dollars and hundreds of thousands of volunteer actions, our time is coming and the American people are fast becoming ready for the full tax replacement alternative - the FairTax."
View the letter in its entirety at http://www.fairtax.org/eco_endorsements.html or you may request a copy of the letter by fax or e-mail by calling Gloria Garza at 1- 800-FAIRTAX ext. 106 or e-mailing gloria@fairtax.org.
What is the FairTax plan?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax, a rebate to ensure no American pays federal taxes up to the poverty level, dollar-for-dollar revenue neutrality, and the repeal of the 16th Amendment. This non-partisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple, visible, federal retail sales tax - collected by existing state sales tax authorities. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. So it is also cost neutral -- the final cost for goods and services changes little under the FairTax. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
What is Americans For Fair Taxation (FairTax.org)?
FairTax.org is a non-profit, non-partisan, grassroots organization dedicated to replacing the current tax system. The organization has hundreds of thousands of members and volunteers nationwide. Its plan supports sound economic research, education of citizens and community leaders, and grassroots mobilization efforts. For more information visit the web page: http://www.fairtax.org or call 1-800-FAIRTAX.
April 15th can become a day just like any other with no complicated tax forms; no wasted hours in tax preparation and compliance and no more tax code for lobbyists to take advantage of.
The Presidents Tax Reform Panel has met several times and is beginning to see the economic drag that the current tax system puts on our economy. Their latest press release indicates that the panel just can't tinker with the current code and solve all we need to solve.
Democrats are seeing the tremendous pain their constituients are feeling with the alternative Minimum tax or AMT. But what can provide a revenue neutral replacement? The FairTax!
American Manufacturers and Unions see that our tax code makes them less competitive in the world market.
The Fair Tax eliminates the AMT, income tax, capital gains, payroll taxes while providing enhanced tax savings for mortgage holders;home owners and for charities.
The FairTax solves all those problems and much more. Those that know the Facts Love the Fair Tax. Read more at www.fairtax.org
The Fair Tax Legislative package is fully researched and in full legislative form as House Bill HR25 and Senate Bill S25. Nationally known economists agree it is the best option for our country so as Larry the Cable Guy says "Let's Get'ER Done! Call your Congressmen and tell them you support HR25/S25 as a 2005 priority. The next April 15th can just be another spring day!
posted by Merrill Bender | 1:29 PM
20 Comments:
The FairTax is NOT fair to the bottom third of Americans who do not own their homes. While some people rent voluntarily, most do not; they rent only because they cannot buy a home. The FairTax is egregiously unfair to these Americans, because it imposes a substantial tax penalty on the inability to buy a home.
While the degree of tax disparity between a renter and homeowner in equivalent housing depends on a number of variables and thus will vary, the renter will pay more FairTax on his housing expenditures than will the homeowner, because some expenses of homeownership are exempt, while none of the renter's housing expenses are exempt.
For example, property taxes paid directly by a homeowner are exempt from FairTax, while property taxes paid indirectly by renters in the rent they pay are fully taxed. Also, the homeowner's taxable housing expenses decline over the term of his mortgage, as principal is paid down at an increasing rate. On the other hand, the renter's taxable housing expenditures increasae over time as rents advance upward.
Where a renter and a homeowner live in equivalent housing, the long-term renter often will pay three times as much FairTax on his housing expenses than will the homeowner. A lifetime renter can pay more than five times as much FairTax than a homeowner.
In the case of voluntary renters, yes, they are choosing to spend money on rent, and the tax inequity they face is voluntary. In the case of renters who cannot buy a home, the FairTax imposes an unconscionable penalty for the inability to buy a home.
The Fair Tax is the best choice for the bottom third or working poor that rent homes and want to buy a home.
Well known economists have already shown that prices on new products will drop 20 to 30% when we switch to the FairTax. when you add in the the Sales tax, consumers will pay about the same as they do now.
The Fair Tax only applies to NEW!!!
A already built home is the most likely purchase for renters and first time home buyers. There is no Fair Tax on that purchase.
Additional benefits to the working poor and renters are:
#1 They take home a much larger paycheck with no payroll deductions and no income tax withdrawals. With more take home they can afford to save for a down payment and have more for their mortgage payment.
#2 The Monthly prebate for a family of 4 is about $479/m to rebate that family all sales tax on goods and services(new) up to the poverty line. Average family of 4 will have thousands in increased spendable income and more renters will be able to afford buying a home than ever before under the Fair Tax.
second class citizen,
What you completely fail to get is that the FairTax makes new houses cheaper so renters can become homeowners faster and with less money.
Renting does not help the poor achieve the American Dream - making it easier to own their own home does.
For those who haven't figured it out. Hmmmm, how can we create a revenue neutral system, and yet the poor and middle class don't bear the brunt of it somehow? The people that will now carry tax burden who never have before are the Chinese and Koreans, etc, who send their cheap merchandise here destroying our industrial and job base in the process. They will need to lower their prices by 23%, or their products will be 23% less competitive as compared to American made goods. ITS ABOUT TIME, IMO.
I'd be all for the consumption tax if it could be made progressive. i.e. Nobody pays taxes on their first x amount (say poverty line), then from there the next y amount you pay 10%, then 20%, etc. (percentages given are just examples)
This would reduce the burden on the poor as they would never pay as much percentagewise as richer people. Rich people would still have incentive not to spend, but if they want to actually have quality of life increases, they would have to.
Furthermore, rebates to those with specific income is already a step in evening out the differential. This tiered system would reduce the extra added to the middle class to give the rich a tax break. (Purchases crossing a barrier line would be split into below and above line rates).
Implementation methodology? Give an unique id to each person (not SSN). If people don't want to have their purchases tracked, they can pay anonymously, but will have to pay the premium (highest) tax rate.
Gives everyone what they want - the eccentric millionares can be all anonymous, and the average joe will get a tax break.
Anonymous is for a consumption tax if we can make it Progressive and he wants to allow for tiered rebates to be anonymous in spending.
Actually, The Fair Tax does that which you suggest.
First the Prebate chaeck is sent to each family based on HHS Povertyline numbers for that Family size. i.e Family of 4 about $25,000.
The Fair Tax sends a monthly check to that family ( about $479/m) to cover the Sales tax on monthly spending of $2083.
There is no tracking of what you spend it on. The Fair Tax assumes you will spend that amount and sends you the check at the beginning of the month to cover what you will spend.
No tracking no submiting receipts.
You could save $1,000 dollars and not spend it - You still get the check.
Whether you are a maid or a millionaire you wil get the same check.
Because of the Prebate check the flat consumption tax now becomes progressive.
The more you spend the less impact the Prebate has on your taxes and your net tax rate goes up.
The wealthy spend more so their net tax paid after rebate received is higher.
A family of at Poverty line will have atrue federal tax rate including payroll taxes of 0%.
Twice Poverty line net rate about 11.2%
4 times poverty line about 17.5%
10 times poverty line for the wealthy their net federal rate is around 21%.
The Fair Tax is well designed and well researched to work for American Families and our American Economy.
Anonymous Here again. Yep - mathematics works out to be progressive assuming everyone spends even near what they earn in a year.
However, I ran the formula's with the numbers you were giving through a 3D surface graph with logarithmic scales-- the numbers I used were:rebate point: 25,000; rate .23, formula as:
effective_tax_rate[income, consumption_percent]=( (income*consumption_percent-rebate_point) *rate)/income
I did a 3d surface chart on income logarithmically (starting 50,000 multiples of 5 to 31,000,000ish) and consumption percentages of 20%-100% (figuring nobody is saving/spending overseas more than 80% of their income).
and what I'm seeing is that pretty much EVERYBODY would be receiving a tax break relative to the current system (assuming net taxable income to be about 5 percentage points less than gross income).
How is that possible without cutting a lot of government spending? Is there really that much tax-deductions/tax evasion that almost nobody is paying over 20% in effective tax?
Furthermore, why wouldn't those that can just spend their money directly overseas in countries without sales taxes? Wouldn't there be economic pressure for more countries to become sales-tax-less if rich American's were incentivized not to spend in the US?
Something isn't adding up.... and I think its the rate... it would have to be around 30% to equalize what I'm seeing... assuming people don't go saving too much after its implemented.
Anonymous,
Not sure I am following all of your calculations but let me try.
"progressive assuming everyone spends even near what they earn in a year"
1. If they don't spend but save that is better for the economy.
It stays relatively Progressive if you include sabings rate across the same wide icome range.
Remember the Prebate is a fixed payment based on Family size. If you spend less than the rebate, you continue to lower your net tax rate under the FairTax.
Rebate Chart.
http://www.fairtaxvolunteer.org/smart/faq-main.html#3
You are correct everyone will be receiving a net tax break compared to the current system.
Keep in mind if aN income tax rate of 25% is adjusted because you pay a graduated rate from $10,000 to 20,000 on up. Even under the Income tax your true rate might be closer to 20%.
Best question is HOW?
Larger tax base with Consumption. you do capture a larger portion of illegal income and their consumption.
Illegal immigrants paid in Cash spend money at Wal Mart.
Many Cash businesses may not report but their owners buy things.
Tourists love the US, not just Disney world but all over and they will now help support our federal budget and Social Security.
Smart Economist have done and studied the numbers and have computed a conservative rate that will be revenue neutral to our current level of government spending.
3. Overseas spending I don't see.
First I believe the Economists studies that indicate a 22 to 25% price drop in the average of Goods and services. Once you ad in the tax you are only 1 or 2% above what you paid before.
I live near the Canadian border. They have a National Sales tax and
a Provincial Sales Tax. I am not saving much by going there.
By eliminating those embedded taxes in our products we will pay about the same as we pay now but take home a much bigger paycheck. Bigger in take home pay by 30 to 50 %.
Wheter a maid or a millionaire, I don't believe it is economically wise to tax savings or investment.
The Fairtax eliminates taxes on Savings and investment and that is an added benefit that will draw foreign investment and return Capital investment to US shores.
instead of the Bahamas being the choice for Corporate Headquarters the US will be the better Tax haven.
I really enjoyed the content on your blog about tax preparation will be back very frequently! I actually have my own tax preparation exposed blog with all kinds of stuff in it. You�re welcome to com by
I really liked the information on your blog about tax preparation I have my own tax preparation exposedblog if you would like to come and see what I have on mine
Wow, what a great site. I will bookmark this site and return often. It's nice to see sites like this.
Please visit my website and let me know what you think. Disney World Tickets
I really enjoyed the content on your blog about tax preparation will be back very frequently! I actually have my own tax preparation exposed blog with all kinds of stuff in it. You�re welcome to com by
I love your information on tax preparation I bookmarked your blog and will be back soon. If you want, check out my blog on tax preparation exposed - please come by
I really enjoyed the content on your blog about tax preparation will be back very frequently! I actually have my own tax preparation exposed blog with all kinds of stuff in it. You�re welcome to com by
This is the kind of site I've been looking for. Definitely bookmarkable! If you get a chance, can you check out best mortgage rate . I'm fairly new to building websites, and would value any opinions
on my best mortgage rate site.
nice blog on federal income tax table I see that there are many oppotunities to make money on the internet. Here is a good resource.federal income tax table
Informative post. Take a look at my credit site ( http://mortgage.27days27gurus.com/ ) f you can. Thanks secured credit card
A year ago, the price of the lowest priced home in my area was six times my annual income. Today that lowest priced home costs eight times my annual income. New or existing home prices simply cannot fall enough under the FairTax to afford me the opportunity to buy a home. Therefore I must continue to rent indefinitely, paying more and more over time while building no wealth for myself. Because the largest embedded tax in my rent is the property tax - which will not disappear under the FairTax - it's unlikely rents will fall, either.
The problem with the "if everyone gets a tax cut how can revenues be the same" argument is that those who present it either do not realize or intentionally leave out the fact that the tax base is expanding.
The tax base is expanded to include the money now in the underground economy of drug dealers, prostitutes, thieves, smugglers, pornographers, counterfeiters, illegal aliens, etc. Not to mention tourists visiting from other countries.
THAT is how it remains revenue neutral while giving all current taxpayers relief.
The Artist
http://www.theartoftheblog.com
Hey - Cool blog, nice layout! Checkout my google people find blog if you can.
Post a Comment
Links to this post:
Create a Link
<< Home