Current system stifles U.S. competition, productivity


For the Journal-Constitution
Published on: 04/15/08

"Great idea — too bad it's never going to happen." Pretty discouraging words, I would say. In fact, it makes you wonder, "Why even put big ideas out there; what is the point?" Unfortunately, these are the words that I often hear when it comes to talking about my FairTax bill.

Ironically, I most often hear them from the folks who follow that comment up with a barrage of questions about the bill and suggestions on how to move the bill along more effectively. It is this phenomenon that strikes me — if it is a great idea, if it is much needed, why then will it never happen? Have we in this society become so jaded that we cannot believe that much-needed change is possible?

Cox/Washington Bureau
U.S. Rep. John Linder is a Republican representing Georgia's seventh district and co-author, with Neal Boortz, of 'FairTax: The Truth: Answering the Critics'
 

Perhaps Ben Franklin said it best in his famous quote, "In this world nothing can be said to be certain, except death and taxes." These words seem to have become America's credo when it comes to taxes, though I would wager that Franklin had not intended that to be the case. We have come to accept our current tax code as a part of our lives.

The FairTax legislation would repeal all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, death taxes and gift taxes and replace them with a revenue-neutral, 23 percent personal consumption tax. Americans would keep their entire paycheck and have the power to choose exactly when and how much to pay in taxes. It has always been a belief of mine that all taxes should be voluntary; we achieve this with the FairTax by offering to every household in America (provided that household can prove it is inhabited by citizens or legal U.S. residents) a tax prebate. The prebate will equal the amount of taxes paid on spending up to the poverty level. For those families who spend money only to buy essentials, they will be completely untaxed — the prebate will cover all their taxes for the year. When Joe Millionaire wants to buy that new yacht, he will pay a 23 percent sales tax on that purchase. This will be the first time in America that we actually tax wealth instead of wages.

There are myriad reasons why a change to our tax paradigm is necessary. It would be impossible to cover them all, but I will offer you the three that I believe are the most pressing:

• First, our current system is taxing American businesses right out of the chance to compete in a global economy. There is an average 22 percent embedded tax in the price of every good that represents the consequences of the corporate, personal and payroll taxes for a business. Foreign goods do not have this burden. Pass the FairTax and we return American industries to a level playing field.

• We must stop punishing productivity. On average, the American worker loses 33 percent of every dollar he earns to taxation. If we move to the FairTax, we unleash the American workers' potential.

• And lastly, under the FairTax we can achieve what Americans have not had for a long time: the privilege of anonymity. There is no excuse for my government knowing more about me than I am willing to tell my kids. Under the FairTax, there will be no more IRS and no reason for the government to know how much you make or how you spend it.

It truly seems like change is a no-brainer, but the current system is perceived as a constant that has always been there and will always be there. It has not always been this way. It was 1894 when Congress endeavored to levy a 2 percent tax on everyone making more than $4,000 a year, which put in motion a chain of events leading to the inception and ratification of the 16th Amendment in 1913. It took 19 years to put in place a new system of taxation, and we all know what has happened since.

Social Security is another example of big change. The program we have come to know today began in 1896 as the Civil War Pension program. It grew and adapted until finally, in 1935, the Social Security Act was signed into law by President Franklin Roosevelt.

I wonder how many people heard in 1895 that all senior citizens would be provided a government pension and said, "great idea — it will never happen." Or how many people heard the idea of an income tax in 1894 and thought it would never happen. I wish they had been right in this case.

It has been nine years since I first introduced the FairTax. My point is that big ideas take time; gaining momentum is its greatest challenge. And there is no greater momentum crusher than Congress.

In just nine years, we have amassed a grass-roots army of more than a million supporters. We have hosted rallies with more than 10,000 people in attendance, and Americans have recruited 70 members of Congress to co-sponsor the FairTax bill.

Ronald Reagan touched on the greatness of our country when he stated that the American people have always had the capacity "to do whatever needs to be done to preserve this greatest bastion of freedom." We will do this; we will do it because we must if we are to preserve the greatness that generations before us created. And to those of you out there who say "great idea, it will never happen," I say to you, "Imagine the dinner table talk when John Kennedy told America we were going to send men to the moon." Now that's crazy.

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