Fair Tax topic of Republican gathering
Published Sunday, August 14, 2011
By Sarah Fay Campbell

The Times-Herald

A presentation on the "Fair Tax," a proposed national sales tax, was the main topic of discussion at Saturday's monthly meeting of the Coweta County Republican Party.

Tom Brown gave the presentation.

Brown said there are about 30 people in the Fair Tax speakers bureau for Georgia, but that most of them are in the northern half of the state. They're looking for more speakers in south Georgia, he said.

Some of the major issues today are unemployment, the federal debt, illegal immigration, the import/export imbalance, the ballooning size of the federal government, and a loss of state's rights.

"The fair tax would have a positive impact on all of these," Brown said.

He said the current federal tax code is a whopping 71,000 pages, and implementing the national consumption tax would do away with all that.

As it is conceived, the fair tax would remove all federal taxes, including income taxes, payroll taxes, corporate taxes, and capital gains taxes. Various excise taxes would not be affected, Brown said, as they are considered consumption taxes.

Those taxes would be replaced with a 23 percent tax on all new goods and services. Brown said there would not be a sales tax on used items.

The fair tax is considered to be revenue neutral -- it would change the way taxes are assessed but would not raise or lower them.

Because of the "prebate," Brown claims the federal fair tax "totally untaxes the poor."

Furthermore, "it absolutely supercharges the economy." Some predictions show the economy growing at 10 to 11 percent per year for the first year, and it "would continue to grow at that rate," Brown said.

Though 23 percent on every dollar might seem like a lot, "when you choose to spend that money, you're spending pre-tax dollars," Brown said.

Because implementing the consumption tax would do away with "embedded taxes" -- the built-in cost of business taxes and other taxes that manufacturers or providers pay -- fair tax advocates predict the overall cost of products and services would actually go down.

Brown said it is estimated that roughly 23 percent of the cost of products now is embedded tax.

"Under the fair tax much of that would go away, and so prices in general would drop, around 12.5 percent on average, for everything we buy," he said.

With the consumption tax then added in, total costs would be about 14 percent higher, Brown said.

The median federal income tax bracket is 15 percent, Brown said. When you add in the payroll tax and compare that to costs with a consumption tax, "you end up with a 9 percent, if you will, improvement in the standard of living," he said.

The "prebate" is a crucial part of the fair tax plan.

"This is the vehicle that makes sure this tax bill would not just absolutely kill the poor," Brown said.

Every American with a valid Social Security number would receive a monthly payment equal to the consumption tax costs on money spent up to the poverty level. You would have to fill out a form each year.

Because of that, Brown claimed, "no one in this country would pay tax on the basic necessities of life."

For a family of four, the federal poverty level is just over $29,000.

Under the fair tax, it is estimated a family of four would pay approximately $559 in taxes. And that, of course, "would absolutely kill people," Brown said. The prebate would ensure those families get a check or debit card for that amount of money each year.

"This is to cover the basic necessities of life, when they are purchased," Brown said.

Under the fair tax, Brown said "every American is treated fairly." There are no loopholes, deductions or exemptions.

Itemizing deductions "is a tax loophole for us rich guys," Brown said. "Under the fair tax, if a poor person wants to contribute to charity or buy their house, they also would get" the same tax benefits as "folks that now itemize," he said.

He also feels the tax would help bring manufacturing jobs back to America. Brown stated that the United States has the highest corporate tax rate in the world, at 35 percent. Therefore, some American companies prefer to operate overseas, where taxes are cheaper.

"Right now there is over $11 trillion in offshore monies," Brown said. "Under the fair tax, that money would come back to the country in a matter of months."

The current tax code is "one of the most inefficient vehicles for getting revenue," Brown said. He said $400 billion a year is spent "just to comply with our tax code."

Brown thinks that moving toward the consumption tax would also eliminate the "underground economy," which includes non-reported cash transactions, organized crime, and taxes not being paid by illegal immigrants.

"Those people are getting a free ride," Brown said, and the IRS estimates the underground economy to be "somewhere north of $3 trillion," Brown said.

Because "people that are well off tend to spend more money," the fair tax taxes wealth, not just wages, Brown said.

The 2011 fair tax bill currently in the U.S. House of Representatives is sponsored by Rob Woodall of Georgia, and the Senate bill is sponsored by Senator Saxby Chambliss of Georgia, Brown said. There are 63 co-sponsors in the House but just eight in the Senate, he said.

The current bill is the "result of $23 million worth of research work over 12 years," Brown said.

With the fair tax, Medicare and Social Security would be fully funded, "you get your entire paychecks, and savings are encouraged," Brown said.

Plus, "you don't have to have a box full of tax records."

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