Posted: May 18, 2005 By: Steve Mathesius

Subject: The FairTax solution

Comment: Dear Chairman and Panel members,

The benefits of a national sales tax, and explicitely the Fair Tax, make an overwhelming argument. There are many benefits to the Fair Tax proposal but here are a few that standout as important to me:

Eliminating payroll taxes will provide transparency to the tax system and be easily understood.

It will eliminate the burden of tax filing entirely which today costs a lot of time, money, and stress.

The Fair Tax will be progressive in the sense that the "prebate" given to individuals makes up for the sales tax that low-income families will pay at the cash register.

The Fair Tax will encourage savings which will help families and the economy in the long-term.

Finally, the Fair Tax will help U.S. manufacturers and service providers be on a level playing field with imports. It will accomplish this by eliminating U.S. corporate and payroll taxes that U.S. producers must build in to the cost of goods/services. It will then apply tax collection at the retail sales level to domestic and imported goods equally.

There are also specific reasons why the Fair Tax is the best solution. I see that there are three main types of solutions being proposed: Consumption Taxes, Flat Taxes, and reform of the current progressive income tax.

Other consumption or sales tax proposals do not go far enough in the sense that they have not been as well researched and do not include the repeal of the 16th amendment as a staple. I believe other sales tax proposals have compelling arguments, but none as compelling as the Fair Tax proposal (HR 25/S 25).

Flat tax proposals do not eliminate the burden of the IRS. Flat taxes tend to shift more of the tax burden to the poor. Flat taxes will not encourage savings nor help U.S. companies have a fair chance in the marketplace.

Reforming the current code with mild steps like changing the top tax rate will do very little to improve things. Such mild changes may be easier to do politically but do not accomplish any real change in the system. Keeping the current progressive code largely intact will simply lead to more years of tinkering and frustration.

This is the time to act boldly to reform the tax system by replacing it with the Fair Tax.

I know the Fair Tax has been well received by my family and friends here in Wisconsin, after I have explained it clearly. Replacing the system IS possible!

Steve Mathesius
Milton, WI