Posted: Apr 29, 2005 By: Laurel Murphy

Subject: We need the FairTax (HR25) now

Comment: Sirs:
I make my comments according to your guidelines.

I. Description of Proposal. I will skip the descriptive details of the FairTax, as they are described fully in HR 25.

II. Impact relative to Current System.
There is no question that the FairTax is superior to our current system and other proposals as well with regard to simplicity, fairness, economic growth and competitiveness, and compliance & costs. In addition, there would be a very short learning curve since retail businesses already know how to collect retail sales taxes, and the Federal government would be able to choose among over 40 state models for the best system of collection and accounting. Since retail prices will, by competitive pressure, "settle" at lower levels to account for all the embedded corporate income and payroll taxes, the possible gain from trying to avoid the FairTax would hardly be worth the effort.

III. Transition, Tradeoffs, Special Issues
The FairTax treats all industry sectors equally by replacing corporate & income taxes. But equal treatment is definitely a step up over the current system. Health care insurance and expense is one area where businesses currently have an advantage over individuals in that business can deduct these costs, and individuals cannot. Another effect is to help level the playing field between small and large business. Small businesses are now overly burdened by the non-wage costs of personnel, primarily payroll taxes, which inhibit growth. Small business has a proportionately greater financial burden to comply with the current tax codes and the complexity of the codes often discourages added entrepreneurship.

There is one industry that will no doubt suffer under the FairTax, and that is Washington lobbyists. After the implementation of the FairTax, they will no longer be hired to lobby Congress, the White House, or the media on tax issues. But don't cry for them; they will still have regulation and subsidy issues to make money on.

There is absolutely no question in my mind that the FairTax (HR25) would be the one reform that would have the greatest positive impact for our beloved country, and I don't mean tax reform, I mean ANY reform. There are obvious economic advantages that will be detailed by others, I'm sure. But in addition, there are "unintended consequences" that will benefit our society. EVERYONE will, EVERY DAY, be reminded of his participation in our political system. Everyone, every day, will be reminded of the inherent value of thrift and savings. Everyone, every day, will have an incentive to earn more, to produce more, than before. Everyone, every day will know he is treated absolutely no differently by the tax code than anyone else, whether it's his next door neighbor or Leona Helmsley, his work colleague or Warren Buffet.

Please investigate the FairTax thoroughly. If you do, I know you will come to acknowledge that it is the best plan for our country, for all of us.

Regards,
Laurel Murphy
Lutherville, MD