Subject: Suggestions for new tax system Comment: Attached are my suggestions for a new tax system. < Andrew Park Customer Technology Marketing 2010 Warsaw Rd Roswell, GA -30076 678-585-1371 apark@ups.com Response to Request for Comments # 2 by the Federal Tax Reform Panel. Submitter: Individual Andy Park 3335 Vista Creek Dr. Dacula, GA 30019 678-714-9888 apark@ups.com April 26, 2005 Dear Chairman Mack and Tax Reform Panel members, Thank you for taking the time to solicit feedback from the American public. I, like most Americans, spend way too much time and energy preparing, planning and paying taxes. In recent months I have become aware of tax plan that simplifies the process and more fairly collects taxes from all our citizens. I am in support of the FairTax (HR 25/ S 25). This is a national sales tax on all new goods and services purchased by the end consumer. Description of Proposal One of the most appealing aspects of the FairTax is that all 290 million Americans will contribute. In addition, we will collect taxes from none citizens residing in this country; including visitors, tourists and undocumented aliens, who enjoy the benefits this nation provides them. Currently, only about 80 million citizens pay taxes. The very rich can pay high priced accountants to find loop holes and the people who choose not to pay (drug lords, criminals, illegal aliens) go untaxed. The FairTax fixes these problems. With the FairTax there are no deductions, credits or exclusions for anything purchased that is new. Used items are not taxed. The FairTax does provide a monthly rebate to all Americans up to the poverty level as defined by the Dept of Health and Human Services. This rebate would compensate households for taxes paid on basic necessities. Many believe that the rich should pay a proportionally higher tax rate. Under this system the more that is spent, the more taxes are collected. The rich will continue to purchase their custom, multi-million dollar homes, buy exotic cars and continue to throw lavish parties. The very nature of their lifestyle will cause them to pay more in taxes than the average American. At the same time, the poor will enjoy tax free income and receive a rebate to compensate them for their basic necessities. Under the FairTax home ownership becomes more affordable. Used homes are not taxed and new homes would be reduced by 20% to 25% because all embedded taxes will be removed. Charitable giving should also improve. All contributions will be made with pre-tax dollars so Americans will have more money to give when the income tax is replaced with a sales tax. Charity is not consumption and therefore is not taxed. The amount of taxes collected under a national sales tax will remain the same, only the collection method changes. A National Retail Sales Tax will fit into the same point of sale tax system already in place. There may need to be some slight modifications, but these will be one time expenses and tax free. States would be compensated ¼ of 1 percent for collection, submission and reporting of taxes. The cost of modification pales in comparison to the current cost of collecting taxes. Under the FairTax, business will flourish, creating more jobs and stimulating the economy. Business to business transactions is not taxed and hundreds of billions of dollars will be saved in record keeping and reporting. Instead of wasting time and energy devoted to tax strategies to save money, they move to more productive endeavors. Because 20% to 25% of embedded tax cost is removed, our products become much more attractive overseas. The boost to our exports will be tremendous. Impact of Proposal Relative to the Current System The FairTax is the simplest solution. Every American will understand what they are being taxed on; it will be printed on their cash register receipt. Nothing is hidden, there are no loop holes and there is no paperwork to fill out. In addition to being simple, it is also fair. All Americans will contribute to funding the government and all Americans would not pay taxes up to the poverty level. The FairTax also eliminates the possibility of people taking advantage of our tax system. The rich would not have loop holes, the underground economy wouldn’t be able to escape it and visitors and others visiting our country and enjoying its benefits would also contribute. What could be more fair? The FairTax would stimulate our economy and increase our competitiveness overseas. Currently, trillions of dollars are kept offshore to avoid taxes. Replacing our current system with the FairTax will bring this money back into the American economy, creating new jobs. The removal of embedded taxes in our products and services makes them move competitive in the global marketplace. According to the Tax Foundation, the FairTax would reduce compliance cost by 95%. The time freed up by businesses and individuals would ultimately lead to more productive endeavors. Transitions, Tradeoffs and Special Issues Systems are already in place to collect taxes at the point of sale. Those systems can be modified to collect a National Sales Tax. The FairTax has no special interests for any group of people, business or industry. The FairTax would require no “trade offs”. The FairTax will require that a check up to the poverty level is sent to each qualified household. This could be done by the Social Security Administration, which in the past has demonstrated a good ability to distribute benefit payments. In closing, the FairTax replaces the current tax structure dollar for dollar, while greatly simplifying the process. It fairly taxes all segments of society and will boost our economy as well as make the US more competitive globally. I hope you will work toward enacting the FairTax (HR 25 / S 25) Thank you. Andy Park |