Chad's Tarheel FairTax Blog

The FairTax Plan is a nonpartisan national grassroots campaign to replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment.

The FairTax Act of 2007 (HR 25): 57 sponsors

29 January 2007

The decline of the flat tax plan

Action America's recent ultimate tax reform poll requested votes for one of three tax reform plans: the flat tax, the FairTax, and taxing the states. The poll was closed January 27, 2007. Here are the final counts:

The Flat Tax
The Fair Tax
Taxing the States

Flat tax support isn't very strong in this poll of 1774 votes over 10 days. Other tax reform polls show similar results.

The Action America commentary has this to say:

The one thing that is clear, beyond any doubt, is that the Fair Tax has far more activist and public support than either the Flat Tax or Taxing the States. Even if the margin of error was an outrageous 50%, the Fair Tax would still have a huge lead. It's also clear that while the Flat Tax has far more activist support than Taxing the States, when it got down to the opinion of the general public, the Flat Tax had no more support than Taxing the States - an option that has not been discussed in any broad public forum and has no advocacy support of any kind.

This kind of result does not bode well for the Flat Tax. Think about it. The Flat Tax has several big name and wealthy advocates. Lot's of time and money has been spent to promote the Flat Tax. Then consider that a tax reform plan that has received zero public attention, has no advocacy group behind it and has had no money spent to promote it, manages to come in only about 2% behind it out of over 1700 votes. Perhaps it's time for Steve Forbes to turn out the lights at his Flat Tax office. His expensive support is creating about the same interest as a no-name proposal.

Please consider this as you decide what kind of tax reform we need.

08 January 2007

A word about wealth

It is a fact that some people earn less money than others, therefore they spend a greater percentage of their income on expenses (including taxes). This isn’t a problem to be solved, only a reality to accept. We live in a country where everyone is free to produce to the limits of their abilities and desires. Saving and investing earned wealth is part of that.

Bringing attention to the issue of percentage of wealth spent invites efforts to "correct" this "problem" with the Robin Hood approach of government stepping in and taking from the wealthy and giving to the poor, or "wealth re-distribution."

Wealth is earned, not distributed. Only individuals earn wealth. They have every right to get their earnings first. The FairTax will see to it that those who earn wealth (be it by work, interest, dividends, inheritance, or dumb luck) get all of it up front, then pay taxes later when they spend it.

The wealthy will spend much more than the non-wealthy, providing the revenue that allows the prebate to go to every household, making purchase of the necessities of living tax-free. This makes it a non-regressive tax and helps the poor and lower classes hold on to more of their wealth.

The FairTax taxes accumulated wealth; the wealthy spend more and pay more taxes because they can afford more. The poor and middle class spend less, therefore they have less tax burden and more income to spend, save or invest as they see fit.

I call that fair.

06 December 2006

The FairTax

I am a concerned citizen writing to urge everyone to support the FairTax and facilitate its passage and enactment.

As a volunteer and supporter of the FairTax grassroots effort and legislation (HR 25), I want to convince you that the FairTax is exactly that: a fair tax. It is a grassroots effort and legislative proposal (HR 25, The FairTax Act of 2007) designed to replace the current hodge-podge of taxes that the government controls with one spending tax that we the people control.

Politicians have indicated support for tax reform, stating that they want it to be "fair." The FairTax is exactly that.

It is fair to government. The FairTax provides the same level of revenue as the current system.

It is fair economically. Our current system is not. It is responsible for forcing prices up, wages, benefits and investment returns down, and jobs offshore. It allows the government first claim to your earnings, then makes you file a yearly tax return at your own expense to explain your finances and justify giving you the excess withheld tax back to you, without any payment of penalties or interest for the use of your money. It gives foreign-made goods an unfair advantage over American-produced goods. Capital that should be circulating in our economy is spent in unproductive tax compliance costs or offshore investment. Savings and investment are taxed, contributing to our country's savings rate ranking last in the world. The FairTax will end the abuse of your head-earned money; you will get all of your earnings first, then pay taxes as you spend, with no requirements to document your income or spending. It will return capital and jobs to our economy and stimulate economic growth, savings and investment.

It is fair socially. Our current system is not. Taxing income contributes to division of society into classes based on wealth. This only serves to foment struggle and dissent among citizens of different classes. Society does not benefit from this.

The FairTax takes advantage of the fact that spending is a reflection of amassed wealth and taxes that wealth as it is spent. The revenue generated by wealth spending is passed down to the poor by paying their taxes for them.

It is fair to the poor and disadvantaged. Our current system is not. The payroll taxes and compliance costs imposed by our tax system are highly regressive and place a great financial strain on lower income citizens. Under the FairTax, the poor pay no tax until they spend over their household poverty line.

The number of complaints and reform proposals regarding our unfair tax system have been increasing in the media and on the Internet for a number of years now. There are too many issues and problems with the current tax code to allow it to continue. We must dismantle it and enact a replacement. The FairTax is the only tax reform plan that will adequately address tax problems and give us a system that will benefit our citizens, economy and society.

Our tax code is one huge, unwieldy, expensive and incomprehensible mess. It cannot be reformed, only replaced. The FairTax is the only plan that will provide meaningful, permanent and fair replacement.

Please visit, learn the details, then visit the section "What Can I Do?" and become a supporter.

It's your money. Here's your chance to take more control over it.

20 November 2006

Flat Tax? No thanks.

In the past few years, an increasing number of articles and stories about tax reform have appeared in the media and the internet. It is becoming increasingly clear that the current US tax code has become a problem that we must address and solve.

One of the proposed reforms is the flat tax, described in Steve Forbes' book, "The Flat Tax Revolution." The flat tax reform proposal (HR 1040 in the last Congress) was a definite improvement over the current system, which requires excessive amounts of time and paperwork for compliance. Filing a simplified tax return on a postcard is a popular and appealing idea. However, history shows us that a flat income tax doesn't offer a satisfactory or permanent solution to our tax code problems.

The income tax started out as a single rate (flat) tax. Under the control of government and isolated from the People, it gradually grew into an oversized, complex mess, with numerous loopholes, multiple brackets and high rates. In 1986, the tax code was overhauled, simplified and reduced down to two brackets. Many deductions and loopholes were eliminated. Today, we are up to six brackets, and most of the loopholes are back.

This demonstrates that a flat tax simply won't stay flat due to the precedents that have been set. A flat income tax leaves the current tax code in place and sets the stage for another return to the system as it is now; Congress has the power of tax legislation, and citizens have little input or control. Lobbyists have better access to congressmen than we do, and use their influence to procure tax breaks for special interests. Each tax break complicates the tax code just a little more, and they all add up to a code with over 66,000 pages that tax professionals and even the IRS don’t fully understand.

Finally, a flat tax is still a tax on income; a direct tax contrary to the founders' vision as set forth in the Constitution. The income tax was made possible only after politicians did an end run around the Constitution and the people in 1913 and took power that the Constitution denied them.

The solution is to stop using income as a tax base, and use consumption instead. There is only one consumption-based tax replacement proposal that will address the problems generated by our tax code: the FairTax Act of 2007.

The use of income as a tax base has led to our current crop of tax problems, such as bewildering complexity, evasion and high compliance costs; the remedy is to shift emphasis to consumption. Such a tax base is more reliable and stable than adjusted gross income, and reflects wealth more accurately; savings and investment are used in addition to income as spending sources. A tax on spending is a tax on accumulated wealth. The simplicity, high compliance rate and zero compliance cost of such a tax system makes it appealing.

A shift to a consumption tax base and total replacement of the tax code should be the foundation for tax reform, including Social Security and Medicare.

There is only one consumption-based tax replacement proposal that will address the problems generated by our tax code: the FairTax. It is a revenue-neutral proposal with a built-in provision to make it non-regressive, removing all tax burdens from the poor.

In the 109th Congress, the FairTax Act of 2005 (HR/S 25) had 63 congressional co-sponsors; the Flat Tax Bill (HR 1040) had seven. The FairTax Act of 2007, introduced on January 4, 2007, has 42 co-sponsors to date.

Popular support for the FairTax is strong and growing; flat tax support has dwindled as word of the FairTax spreads. Two very successful FairTax rallies have taken place; no flat tax rallies have been held or planned. Neal Boortz and John Linder’s book “The FairTax Book” has outsold Steve Forbes' book "Flat Tax Revolution" by a considerable margin.

Income tax in any form, flat or graduated, is unacceptable. It's time to scrap all income-based taxes once and for all and replace them with a single tax, one that we control. At the same time, we need to repeal the 16th amendment so that income taxes will remain a memory. Once enacted, the FairTax will replace all current federal taxes with one consumption tax. Companion legislation, to be re-introduced to Congress soon, will start the process toward a constitutional amendment that will repeal the 16th amendment.

The flat tax was a good idea in its time, but that time has come and gone. There is a better choice now. Let's give the FairTax a chance.

Chad Sargent
FairTax Volunteer
Raleigh, NC