Tuesday, March 8, 2011

The Fair Tax Book by Neal Boortz

The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS
Review written in 2005
This book is an explanation, or perhaps an apologetic for, the passage of HR-25, the Fair Tax Act of 2005 (which I assume didn't pass). Boortz and his co-author, Congressman John Linder, describe our current mess of a Federal Income Tax system and their proposed solution, its repeal and the institution of a national sales tax.

Unlike most people, I'm well aware of just how much money gets sucked out of my paycheck every month by withholding taxes. I've tracked my income and expenses with personal financial software for about ten years now, and I get to see a graphical representation of just how much the government is confiscating. So, their revelations were no great surprise to me. What was more interesting was their description of some of the hidden costs of taxation, such as how corporations merely pass on the cost of their income taxes to the consumer, thus resulting in higher prices, and the impact of tax considerations on everyday decisions made by American business, as well as the financial and productivity costs of tax compliance.

There was a short section on IRS horror stories. I'm sure one could find many more in other books or publications.

Most of the book, however, is spent discussing the details and merits of their proposal. I'm including here, from the FAQs on their organizations web site, http://www.fairtax.org/, a thumbnail sketch of the 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 nonpartisan 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."

All in all, I think their proposal has some pretty strong merits. I did have some questions about the details of implementation, however. I also am somewhat pessimistic about the chances of ever enacting such a law, given the strong lobbying positions of the many special interests who feel that a "transparent" tax system is not in their favor.

If you want to do some serious thinking about taxes, read this book. I strongly suggest you visit the web site, too.

1 comment:

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