Campy's Editorial Page

The Future is FairTax

August 2001

By: Congressmen John Linder (R-GA) and Colin Peterson (D-MN)

Reprinted with permission

    During the debate over tax relief this year, we have sought to rework our tax system.  Tax relief is important, but the current debate obscures the fact that our tax system is broken, and tinkering around the edges won't fix it.

    What began in 1913 as a single two-page form backed up by 14 pages of law, has become a nightmare of complexity that punishes work, saving, investment, risk-taking, and entrepreneurship.

    The tax code has become so complex that even the IRS cannot understand it, and the problem is getting worse.  In 1997, reporters from Money magazine received inaccurate or incomplete information 22% of the time when calling the IRS's toll-free hotline.  Despite efforts to correct the problem, wrong answers given to Treasury Department investigators during the 2001 filing season increased to 47%.  Taxpayer Assistance Centers (TAC's) didn't do much better.  Investigators visited TAC's in 11 different states and received incorrect answers 49% of the time.  If trained IRS employees can't understand the tax code, how can we expect average citizens to understand it?  It is no wonder that the private-sector compliance costs of the income tax exceed an astounding $134,000,000,000.

    There is only one real solution to the quagmire of our federal tax system: fundamental tax reform.  We need to get rid of the current code entirely and build a new system of taxation that is better for taxpayers and our economy.

    The solution to our tax problems is the FairTax, created from years of work with consumer focus groups, forums with small business owners, and application research from America's top economic minds - including professors from Harvard, Stanford, and Boston University.  Although we relied on economists for the numbers, we relied on the American people for the FairTax concept.  We found that Americans wanted a system that was fair, easy to understand and easy to implement, and that there should be no exceptions and no special treatment.  

    We put all of these ideas into the FairTax to create a fairer, simpler code that is revenue neutral and makes no policy decisions.  We simply abolish the federal income tax, the payroll tax, the self-employment tax, the capital gains tax, and the estate and gift tax; and we replace these with a neutral sales tax, currently calculated at 23%.  No exceptions.  No exemptions.  Just one tax paid on every final retail sale.

    Though less discussed than the income tax, the payroll tax is more burdensome for most Americans.  Amounting to 15.3% of every paycheck, this money comes out before the worker ever sees it.  With the FairTax, you would keep your entire paycheck.  You can still rely on Social Security, however.  It will be fully funded through the sales tax.

    To ensure fairness to low-income families, we include a sales tax rebate, mailed to each family monthly, allowing all purchases up to the poverty level to be made completely tax-free.  In this way, all the necessities of life are bought without any tax-burden.

    And we mean "without any tax burden."

    Today, taxes are hidden in the price of everything you buy.  Corporate income taxes, payroll taxes, tax compliance costs, and more are all hidden in the price of every loaf of bread and every gallon of milk that American families bring home.  Our team of economist has calculated these hidden taxes to be an average of 20% of the cost of goods.  Eliminating these hidden taxes could lower the price of goods at home and lower the costs of our exports as well.

    Passing the FairTax will be no small task.  We are working with both sides of the aisle, on both sides of the Hill, and throughout the country to make this bill a reality.  We now have over 400, 000 supporters and that number continues to grow everyday.  And when the days comes that we pass the FairTax into law, all Americans will have more control over their lives, more opportunities, and more individual freedom.

What is the FairTax?

     The FairTax is one of the most exciting proposals to ever reach the American people. It offers long-needed tax relief – in the form of lower prices, nearly nonexistent compliance costs, and the ability to choose how much to spend in taxes – to all Americans, while eliminating the income tax and allowing Americans to keep 100 percent of their paycheck. The FairTax will dramatically reduce prices, protect and ensure funding of Social Security and Medicare, empower the low-income earners, and put choice and control back into the hands of every American. All the crucial elements are in place: a public that is eager and ready for a fairer tax system, and a Congress willing to seriously consider genuine tax reform. To be competitive in the next century and to renew the American dream, we must change the way we fund our national government.

 The FairTax Act:

 Results of the FairTax:

For More Information:

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