FairTax – Makes April 15 Just Another Day

This issue of West Of was distributed on Apr. 15 – Tax Day. Whether you struggled to fill out your tax forms personally or relied on a tax preparation service to file your returns, our income tax reporting system can be time-consuming, costly and stressful!
America was founded without an income tax. Our Constitution forbid direct taxation. In 1913 our Constitution was amended to allow for the collection of income taxes (from whatever source derived) and the Internal Revenue Service (IRS) was created.
The income tax initially only applied to the wealthiest Americans and the top rate was 7 percent. Since then, taxes were added to include corporations, a 15.3 percent payroll tax shared by employers and employees, dividends and capital gains, gifts and estates. America’s corporate income tax is the highest in the world and has driven millions of jobs overseas.
Our tax collection system is incredibly inefficient. The IRS estimates that we have an annual tax evasion rate of $450 Billion. Economist Art Laffer conducted a study in 2011 showing that it cost households and businesses $431 Billion to comply with our tax code. Combined, that makes up about 30 percent of our total tax revenue.
Our income tax system is also very fluid. Thousands of Washington Lobbyists negotiate with Congress to get changes to the tax code which benefit their clients. The IRS was only able to answer 40 percent of its hotline calls this year. Albert Einstein once said, “There is nothing in the world as complex as the income tax code.”
There are also strong moral arguments against the income tax system. Citizens are treated differently within our tax code. It is often used to pit one group against another. IRS audits put the burden of proof on taxpayers and remove their 4th Amendment right to privacy and 5th Amendment right to avoid self-incrimination.
Craig Bergman from Gadsden Films and filmmaker Judd Saul recently travelled throughout the country to produce the documentary Unfair: Exposing the IRS. Bergman notes, “Taxes constitute more than an economic issue; they are first and foremost a moral one.”
It’s well-known the IRS profiled Tea Party groups. Bergman’s film documents that such disparate groups as the American Legion, Pro-Life Revolution, National Organization for Marriage and pro-Israel group Z Street were also targeted. The IRS also routinely goes after the tax credits claimed by adoptive parents. Learn more about this riveting documentary at www.unfairmovie.com.
I’ve identified the problem with the income tax system. I have been working on the solution since 1999 – the FairTax plan. Charleston was among three test market cities used to develop the FairTax through taxpayer phone surveys. I was surveyed in 1998 and noted that capital gains taxes on mutual funds were unfair since that income had previously been taxed. The concept of not taxing savings and investment also appealed to me.
The FairTax plan is based on more than $20 Million in economic research. The Beacon Hill Institute projects that the FairTax would boost the average family’s income by 27 percent. Another key factor is that it doesn’t tax businesses, creating more incentive for business creation and expansion in America.
The FairTax Act was first filed in Congress in 1999 and the FairTax.org website was established. The organization which educates the public on FairTax is called Americans For Fair Taxation (AFFT), based in Houston. I currently serve on the national AFFT Board of Directors. The House FairTax bill (HR-25) currently has 66 co-sponsors, including Rep. Mark Sanford.
Replacing the income tax code with the FairTax is sure to be an issue in the 2016 Presidential campaign. Former Arkansas Gov. Mike Huckabee is a staunch supporter. Sen. Ted Cruz and Dr. Ben Carson have spoken about the need to abolish the IRS, which could only be done by repealing the income tax code.
I encourage everyone to research the FairTax and let your members of Congress and Presidential candidates know where you stand. To quote President Ronald Reagan, “Our federal tax system is, in short, utterly unjust and completely counterproductive … it has earned a rebellion and it’s time we rebelled.”
John Steinberger is the former chairman of the Charleston County Republican Party, a leading Fair Tax advocate, and a West Ashley resident. He can be reached at John.steinberger@scfairtax.org.