by vagabond
It seems that a national sales tax in lieu of income tax and payroll taxes would discourage purchase, thus lowering demand and forcing prices down. This in turn would reduce sales tax revenue, as the tax is imposed as a percentage of price.

I got two of my favorite calls this week. My former employer called me for the best address to send me my tax forms and my mom called to see how much money I had spent on books. Her question was followed with a reminder not to spend too much more or I wouldn't have money to pay my taxes. Implication: I may take season two of Walker Texas Ranger back this week. There weren't too many roundhouse kicks or Indian spirit moments anyway. After all, the government deserves my money more than Mr. Norris does.

If I were Chuck Norris, trained by Bruce Lee with the ability to form out of body experiences, I would probably leave my body and deliver a sound roundhouse to every lawmaker who helped make today's tax code. But even Walker would get tired, because our system is the result of thousands of lawmakers and lobbyists and decades of codification. Our archaic system employs thousands of people and costs billions of dollars in compliance fees. It would be great to return to the days of old when one tax lawyer with a pencil could be the accountant for all of Texas. Fortunately, we can.

The solution lies in H.R.25, the Fair Tax Act of 2005. H.R.25 calls for the repeal of individual income taxes, corporate income taxes, capital gains taxes, estate taxes, Social Security and Medicare taxes and others that are lesser known. The legislation replaces these taxes with a 23 percent sales tax levied on all retail purchases. 23 percent allows the government to collect the same amount of money it currently brings in while solving the problems of our current system.

Before I begin receiving hate mail to the tune of "Jake Vial hates poor people," I must explain that the legislation also calls for a "prebate" consumption allowance. The 23 percent tax on the required spending for basic consumption (adjusted for sizes of household) is paid back to all consumers by the government. This means individuals are taxed only on what they spend beyond what they need.

Opponents of the legislation argue that eliminating corporate income taxes will place the entire tax burden on individuals allowing businesses to profit. The truth is that every tax levied is already passed on to the consumer. In the supply chain, taxes are passed down until they end up in the laps of Cordell Customer or Trivett Employee as an increased price for goods or a decrease in wages. Former head of the Harvard Economics Department, Dr. Dale Jorgensen concluded that 22 percent of the prices of consumer products represent taxes. Since every business that has a hand in making the product passes the cost of taxes on, it is clear how quickly the sum can add up. We're already near the 23 percent simply by getting rid of just embedded taxes alone.

You are now ready to invest your money tax-free and spend it when you need it. Currently you pay the government every paycheck, cannot earn interest on what you withhold and get excited on April 15 if the government returns your money to you. With the FairTax system, you earn interest and pay taxes only when you choose to. Other benefits are passed down to the consumer as well.

Businesses are no longer concerned with the willingness of their consumers to pay for additional tax burdens. They will invest in projects that will increase their earnings without increasing the costs of their products. Companies will quit fleeing the country to find income tax havens in Bermuda. These implications mean more jobs and money for the American workforce.

Other savings exist. They involve more economics than I care to explain in a seven hundred word column, but I will opine that the FairTax ensures that our underground economy is taxed, offshore bank accounts disappear and the U.S. will become the tax haven for international corporations.

Talk show host Neal Boortz and Congressman John Linder explain more in a book titled "The FairTax Book." Buy the book and you can help increase their income and their tax burden.

I have a few more episodes of Walker to attend to.

I think this is an exciting time for all of us. I have always been a fan of a FairTax, flat tax, etc. About a year and a half ago following some publicity on television (most likely Fox News), I purchased a copy of Congressman Linder's book The FairTax Book. Wow! What a dream come true.

I have always stood up for lower taxes, attending local meetings and talking to our elected officials. But now I am real serious.

When Congressman Ed Whitfield announced he would be holding a town hall meeting here in Paducah, Kentucky, I felt it was time that I had an opportunity to speak with him face to face about the FairTax. On occasion, when given the chance with his field representative, I have always passed along the thought of giving a tax break to hardworking people who are being punished for trying to be successful.

I went to the meeting at our local community college, where a crowd of approximately 60 people attended. The questions ranged from immigration to jobs. Then it was my turn. When I first stood up I asked him if he was familiar with HR 25. Seeing the kind of puzzled look on his face I said, “It is the bill that Georgia Congressman Linder has sponsored.” He commented something to the effect of that being a tax issue.

We discussed the matter further. Then I asked him if he thought the bill would have a chance to pass and he said, “Honestly, no.” And he then stated that there is public sentiment for simplifying the tax code, and that should be the focus of Congress.

I then thanked him for his time. The meeting was soon dismissed. I wasn't out of my seat before people began coming up to me wanting to know more. One even told me that he had sent Congressman Whitfield, Senator Mitch McConnnell, and Senator Jim Bunning copies of The FairTax Book. Once I left the meeting room in the lobby of the school, more people came up to me asking for information about the FairTax issue. Even in the middle of the Paducah Sun newspaper reporter's interview, several people came up to me wanting information.

That afternoon, I downloaded the sample letters from the FairTax.org Web site and wrote an e-mail to many of my friends and business associates encouraging them to write letters to the congressman and senators. Many of them responded that they would send their letters.

After I received a call the next week from Aaron Schutte at FairTax Central informing me that Congressman Whitfield had signed on as a co-sponsor, I called the congressman's field representative here in Paducah, David Mast, to thank the congressman for co-sponsoring the bill with Congressman Linder.

In response to the question, “Do you think asking him at that meeting directly correlated to him signing on to the bill?” I would have to say yes.

Congressman Linder even said in his radio interview last weekend on Sandy Springs Radio that Congressman Whitfield said that it had come up in a town hall meeting.

I will be sending another e-mail out to my friends to encourage them to write a letter to thank Congressman Whitfield for signing on to HR 25.

We will continue to contact our two senators to sign on to the Senate side of the bill.

I wear my “Make It Just Another Day” button as much as I can and have taken it off many times to give it to someone who wanted one. I even gave one to Senator McConnell's field representative the other day at an event. (I have placed another order for more.)

In the near future, we plan to organize a meeting and some special events to help educate the public on the FairTax.

Sincerely,

Terry L. Schmitt