Subject: The FINAL SOLUTION to tax reform
Comment: HR 25, the Fair Tax Act, is the best solution to reforming the tax code because it meets all the criteria (goals) president Bush has said he wants in a reform package.
Thank you for your service and all the hard work.
John Paul McDaniel
4932 Oak Bluff
Mesquite, Texas 75150-3193
To help all Americans (ESPECIALLY the older ones, and the poor, on a
limited income), everyone should support HR
25, the Fair Tax Act and help President Bush make it a
reality. This will bring America to the pinacle of
prosperity. When HR 25 becomes law, it will give
seniors (and all Americans) an average 10% BOOST in purchasing power.
Here’s the way to generate (inside the U. S. economy)
"heaps & gobs" of money that will be "looking for a
place" to be spent or invested.
America is currently plagued by the problem of
joblessness, and in spite of the best efforts of those
in charge of remedying it, little, if any, progress is
being made. Other countries such as China, Japan,
Korea, and others seem not to have this problem to the
great extent that the U. S. A. does. America’s retail
shelves are stacked with cheaper foreign goods that
have driven American manufactured goods out of the
market. Americans no longer provide many services in
the U. S. A. because they have been outsourced to
foreign countries such as India because labor costs
are much cheaper there.
Methods of taxation in other countries also contribute
to the American unemployment problem. Most Americans
do not realize the Europeans, Australians, and
Canadians (with their GST----Goods and Sales tax), and
countless others with a VAT (Value Added Tax) have
had a discriminatory tax on American goods and
services for decades! This discriminatory tax is 15
to 25% in Europe.
It works like this: every business has many costs,
one of which is taxes (payroll taxes, profits taxes,
etc.). In the U. S. A., these costs, like all other
costs, are included in the prices of our products, but
we don’t itemize (clearly showing) the specific
increment that is taxes. When we ship that product to
Europe, etc., they add the VAT to the already
tax-laden American product.
Companies in the VAT countries, like American
companies, have to pay taxes, but they keep track of
the taxes as the product proceeds along the production
process. They call the incremental taxes VAT. When
the product is put on the retail shelf in Europe,
etc., it includes the VAT, and the VAT is revealed to
Now it gets interesting: when a tax-laden American
product (about 22% on average) is put on the shelf
next to the EU product, in Europe, the VAT is added to
the American product. Now the American product is
20+% more expensive than the comparable EU product!
Guess which one sells?
Conversely, when the EU product is
exported, they remove the VAT! When that EU product is
exported to the US, it sits on the retail shelf in the
US with no taxes included right next to the American
product with all the taxes included! So, once again,
the American product is 20+% more expensive than the
comparable EU product, and on our own shores! Guess
which one sells?
We have put up with this nonsense for
decades, while we debate tariffs on foreign steel and
other like products produced domestically in the U. S.
A. that must be protected from foreign competition if
our domestic industry is to survive. Tariffs and other
protectionism measures have not proven to be a
satisfactory solution in protecting our domestic job
market. The Smoot-Hawley tariff of 1930 was enacted
to protect the American farmer from competition from
much cheaper imported farm products. It represents
the high-water mark of U.S. protectionism in the
twentieth century, and it precipitated negative
results (retaliation by other countries).
There is a plan all ready to go that, if
enacted into law now, will produce the kind of
super-rapid economic growth and new job-creation that
is sorely needed, plus generate many additional good
results for our nation! It is H.R. 25, the Fair Tax
Act of 2005. This bill has bi-partisan sponsorship,
widespread support among the hard-working
taxpayers/voters, and fast growing support within the
House of Representatives (over 55 co-sponsors) and
The Fair Tax will produce these highly
· Our nation will enter a period of many years of
sustained economic growth with new job-creation
unequalled by anything in our past history.
· The Fair Tax plan will bring back a measure of
fairness and freedom to America that has been sorely
trampled-upon by the Income Tax System (and IRS) for
many, many years.
· Receipts from the Fair Tax will be more than
sufficient to fund the Social Security System and
Medicare, plus enable the government to meet its needs
and steadily pay-down the national debt.
The Fair Tax draws on a much larger tax
base (our GNP, gross national product each year, when
it is sold) than does the income tax; virtually no one
will be able to evade paying at the "check-out"
register. This will lighten the load for all of us.
Under the Fair Tax the "sticker price" of all that you
buy will fall 20-30%. So, even with the 23% Fair Tax
added on, the cost of living would be no more than it
is now, more likely it would be less.
The Fair Tax will:
· Replace the current complex and unfair federal tax
system with a simple sales tax.
· Eliminate personal and corporate income taxes and
Social Security, Medicare, gift and estate taxes.
· Save taxpayers $250-$600 billion now being wasted in
complying with the current tax code.
· Lower "sticker" prices 20-30% by removing the cost
of business compliance with the current tax code.
· Make American products more competitive with foreign
products. Thus, hurling American manufacturing levels
to dizzying heights not seen within recent memory.
· Provide a more stable revenue source and raise the
same amount of money for the federal government with
the imposition of a 23% sales tax with no loopholes.
· Dramatically lower tax rates for lower and
middle-income Americans by pre-bate payments to
households to offset the sales tax on necessities.
· Protect and ensure the funding of Social Security
· Repeal the 16th Amendment and eliminate the Internal
Revenue Service as we know it. Taxes on income will
no longer be constitutional.
· Bring capital investment flooding onto American
shores. Business, no longer being taxed, will enjoy
America as a "tax sanctuary", the most
“business-friendly” nation on earth.
Whole-heartedly support House Resolution #25---the
Fair Tax reform proposal as a curative solution to
relieve the American people of the tyranny of our
present tax system (income tax IRS) and put Americans
back to work. That would be a great legacy to leave
the American people.
The current 7-million-word tax code requires 1,168
pages (2 volumes) to publish, and an additional 6,439
pages of Federal Tax regulations that apply to income
taxes. The IRS has created 480 tax forms with an
additional 280 to explain how to fill out the 480.
More Americans work in tax compliance occupations
(CPAs, tax attorneys, etc.) than serve in the entire
U.S. Armed Forces. The IRS is twice as big as the CIA
and five times the size of the FBI. The compliance
costs dwarf the amount of the tax collected. In
addition to that, the IRS spends a yearly $10 billion
budget. The total national cost of compliance (not
counting the taxes paid) is $250 billion yearly.
That's $850 per capita of U.S. population.
The Fair Tax reform proposal, which may be fully
understood at the website www.fairtax.org , is the
best alternative to replace the IRS. It is a simple
(retail only) national sales tax. It is not a VAT
(value added tax---applied at every level of the
production process). Business-to-business
transactions, not being retail, are not taxed. Nothing
is deducted from the employee’s paycheck. He has to
spend it on new goods only, not used goods, for it to
be taxed. Thus, one is in charge of one’s own "tax
The individual person is allowed to spend the first
$9,310 of his yearly income tax-free (he will get
monthly reimbursement refund checks for taxes paid on
that amount), $18,620 (for a couple), $21,800
(household of 3), $24,980 (h.h. of 4), $28,160 (h.h.
of 5), $31,340 (h.h. of 6), $34,520 (h.h. of 7), $37,700 (h.h. of 8).
Under this system, "sticker" prices would fall 20-30%,
thus, giving our exports a much better competitive
edge when sold abroad. This would "kick" the economy
into high gear. Businesses (no longer having to send
the IRS any money at all) would simply pass the
savings on to the consumer, their shareholders, and
their employees as higher wages. Forty-five of the
fifty states use a sales tax to generate revenue
because they know that it is the fairest, simplest,
easiest, most cost-effective, most problem-free method
of taxation. The state taxing authority in each state
would assume the duty of collecting the national sales
tax for the U. S. government. Only the retailers file
a tax return stating the amount of their sales for the
year. For everyone else, April 15 is just another
Each taxpayer gets a monthly refund check in the
amount taxed on his spending up to the poverty line.
So, in effect, he is only taxed on his spending above
the poverty line. In no case will anyone sacrifice
more than 23% of his total income to the sales tax,
even if he spends all his income on retail purchases.
Unspent income remains tax-free and available for
investment or education expenses. Compliance cost of
administering the Fair Tax is only $8 billion yearly.
That is a big savings compared to the $250 billion we
now pay. The IRS, with all the taxpayer support
services that it has made necessary, is intolerably
burdensome and expensive.
At the Fair Tax website www.fairtax.org , don't stop
with the first frame. Click on each of the major
headings for more complete information. It will take
awhile to do all this, but it is well worth it. You
will learn everything you've always wanted to know
about the economy and taxation, but were afraid to
America, producing an endless supply of high quality,
competitively priced goods and services, will have a
behemoth-size trade surplus. An ever-expanding
economy will shift the balance of payments in favor of
the U. S. A. America will be a lender to many, a
debtor to none. There will be jobs and income for all
who will work.
“There is nothing more powerful than an idea whose
time has come.” ---Victor Hugo
John Paul McDaniel
4932 Oak Bluff
Mesquite, Texas 75150-3193
50 Reasons I Support the FairTax
(How many reasons can you give for supporting the present obsolete IRS & income tax system?)
Those Who Know the Facts Love the Fair Tax
“Family Friendly Tax Reform”
Tax Reform with far less pain and much more gain!
Out with the Old Code and in with the New
1. It allows you to keep 100% of your paycheck, with nothing withheld for Social Security and Medicare payments.
2. It eliminates the regressive payroll tax that hurts the poor. Currently, every one of us is taxed a minimum of 7.65% on our first-dollar of wages up to $90,000, if we earn that much.
3. It assures that the wealthiest Americans will be voluntarily helping to fund social security with every last dollar they spend above the poverty level. Today, earnings are subject to payroll taxes only up to $90,000. The wealthiest Americans therefore do not pay into the system above that amount. If their earnings are from investments, no earnings fund the Social Security system. Under the FairTax, a single purchase (regardless of the source of the earnings) can result in greater contributions to the Social Security system than would be paid by an individual under the payroll tax of today.
4. It provides funding for Social Security and Medicare at a level equal to or greater than at present, with a stronger and broader tax base.
5. It secures the future of Social Security and Medicare because all spenders fund it and not just the workers.
6. It eliminates all personal income taxes, payroll taxes, corporate income taxes, gift taxes, death taxes, and capital gains taxes.
7. It eliminates the income tax and the IRS. Members of Congress and the public overwhelmingly agree that the current internal revenue code is cumbersome, intrusive, coercive, and inefficient.
8. It is revenue neutral with the present income tax system, funding the federal budget at current levels.
9. It will remove an average of 22% of the cost of American made goods by removing the built-in payroll tax (the other 7.65% of earnings that employers pay) and other business taxes that are now passed to consumers as an “embedded" tax of approximately 22% due to the cascading of income and payroll taxes paid by U.S. employers, at every step of production, to the U.S. Treasury.
10. It doesn’t tax used items – clothes, cars, homes. Only new items are taxed when sold by a business to an individual.
11. It is progressive, a “prebate” of the tax amount up to the poverty level is given to everyone. This means that those spending below the poverty level have a net gain because the “prebate” exceeds the amount paid in taxes. (Under the present system they pay the payroll tax even if they get a full refund of income tax withheld.)
12. It eliminates 90% of the cost of compliance. American families and American businesses waste an estimated $250 – $600 billion per year doing the paperwork necessary to comply with the tax code. That is roughly $1,000 – $2,000 annually for every man, woman and child in the U.S.
13. It creates an opportunity for our products to leave this country costing an average of 25% less, thus increasing our exports, lower our deficit balance of trade, and increasing employment at home.
14. It encourages investment in companies located in the U.S., thus providing a home for money already in the US and attracting more. The U.S. will be the most attractive tax-free haven in the world for doing business. American companies will return from offshore and overseas.
15. It encourages repatriation to the U.S. of money held by U.S. individuals and companies now in foreign countries, with no tax consequence.
16. All 290 million Americans and 51 million visiting tourists fund Social Security and Medicare with their purchases. Today only 110 million workers fund these programs via deductions from their paychecks.
17. The broader tax base includes the ten percent of our economy, an estimated $1 trillion, that today is underground or under the table. Under the FairTax, the illegal drug dealer will pay his tax just like the rest of us when he buys his sunglasses, BMW, and other items, as will those who do business for cash.
18. It allows families to save more for home ownership, education, and retirement. An average family making $50,000 will have $7,500 more spendable income.
19. It makes educational tuition a tax-free expenditure of tax-free income.
20. It makes American products more competitive overseas by removing the embedded tax from them, thus lowering their prices, which compensates for low foreign wages.
21. It makes American products more competitive at home by removing the embedded tax from them, compensating for the low cost of imported products not burdened by taxes imposed by exporting countries.
22. It removes the need for formal 401-K’s, IRAs, HSA, etc. Anyone will be able to set up any kind of savings or investment account without regard to taxes or the government.
23. It frees churches and other non-profit organizations from the expense of filing tax returns and paying their half of Social Security and Medicare payments for employees. There will no longer be any 501.c.3 or 501.c.4 non-profit tax status, because there will be no more tax to be exempt from.
24. It restores to churches and non-profit organizations the 1st Amendment right to engage in free speech, without fear of losing their tax-free status.
25. It gives individuals and businesses the right to donate as much as they want to in a given year to charitable causes.
26. It restores the 4th Amendment, protecting against unreasonable searches and seizures, from which the IRS presently is exempt.
27. It restores the 5th Amendment, which guarantees the right to due process. Under current systems the IRS has their own courts with their own set of rules not included in the 5th.
28. It cleans up a major flaw in campaign financing, eliminating campaign donations for "tax favors".
29. It eliminates wrangling in Congress over tax cuts, the tax code, and who is or is not paying a fair share of the tax bill.
30. It encourages work by letting workers keep 100% of their earnings and giving a rebate, to boot, making the notion that the more you work, the more money you have, a reality, unlike the current system where welfare is lost when you go to work, so your first dollars earned after taxes just offset what you were currently getting in welfare, making you no better off.
31. It allows more of the lower income families to become home owners by allowing a second job income above their current income (all tax free) to be applied to a mortgage. Money for down payments for homes is also saved totally tax free so that it will accumulate faster.
32. It allows families to retain farms and businesses in the hands of those who built them through the elimination of the death tax.
33. It allows families to help each other out tax-free, by eliminating the gift tax.
34. It encourages individuals to self-insure, making the health system more direct pay (no 3rd party pay), thus bringing costs down.
35. Without FICA to pay, most states, counties, municipalities, and school districts will see a large increase in their state budget revenues, additionally lowering the overall tax burden (State & Federal) for most Americans.
36. It assures that no American will find, at the end of the year, a need to get a loan to pay taxes as an alternative to penalties, interest, or cheating.
37. It restores individual privacy. The government no longer needs to know where you work, what you are earning, and what you are doing with it.
38. It eliminates the need to have a "marriage" clarification declaring who you live with, as that has no bearing at all on a state or federal sales tax.
39. It eliminates the need for courts to decide which divorced parent gets to take the tax deduction for children.
40. It reduces production costs for farmers and other subsidized businesses, leading to a reduction in subsidies, thus reducing the federal budget.
41. It eliminates the administrative costs incurred by states in collection of state sales taxes because states will piggyback the state tax collection onto the national tax collection, for which they are compensated by the FairTax ¼% administrative cost give-back. [Doesn’t this go to the retailers?]
42. It results in a windfall profit for many of those holding taxable corporate high interest bonds at the time of passage of FairTax, since they will not be taxed under FairTax. (A higher interest rate is usually paid to entice investors to buy the corporate bonds rather than go with the lower interest, but tax free, municipal bonds, now.)
43. It shifts the tax to consumption, which consumption tables over time show is more stable than income, therefore the tax revenue stream is likely to be a more stable and predictable amount.
44. It results in Federal Reserve rates being based on current consumption, which is rather stable, instead of future earnings, which are less predictable, resulting in surer inflation prevention.
45. It allows for better planning by businesses, because they no longer have to consider tax implications for everything they do.
46. It makes higher employment or better compensation possible in the small business sector where today it costs approximately three dollars in compliance costs to pay one dollar in payroll and income taxes.
47. It moves many now providing tax preparation, advice, accounting, planning, and records maintenance into an expansive economy where they will be producing goods and services. There they can add to the standard of living of all Americans and likely earn more than they do currently, instead of shuffling paper for the government (and not contributing anything economically to society).
48. It relieves citizens of the risk of facing the shift in burden of proof that is so common with the current system, i.e., the taxpayer is guilty unless innocence can be proved, when even IRS staff sometimes give conflicting interpretations.
49. It’s simple, unambiguous, and certain, the opposite of the current tax code.
50. It’s good for the environment. It reportedly would save about 300,000 trees a year that are needed to produce the paper for the IRS compliance and tax forms, enough to reach around the equator placed end to end 28 times. Also, since it taxes only new items, it would encourage buying tax-free pre-owned cars, clothes, furniture, houses, etc. Reuse is good for the environment, too.