Subject: Tax system comment Comment: Response to request for comments # 2 by the Federal Tax Reform Panel. Individual submission Larry D. Whittington 335 Elbe Drive Alpharetta, GA 30022 larry.whittington@earthlink.net April 26, 2005 Dear Chairman Mack and Panel members, I suggest that the existing income tax system be replaced by the FairTax plan. The FairTax (HR 25 / S 25) provides for a National Retail Sales Tax instead of an income tax. Please consider the FairTax and recommend it as the solution. The FairTax addresses all the points specified by President Bush as required in a new tax system. The FairTax promotes a consumption tax. It provides that the only exclusions from a National Retail Sales Tax be the transactions among businesses and purchases of used goods. Exclusions, credits, exemptions and credits would, otherwise, be eliminated. The tax rate for a National Retail Sales Tax should be sufficient to fund government at current levels. The change in how taxes are collected should not affect the amount of money needed to fund what government does. The FairTax distributes the burden of tax-paying over a much wider tax base than currently exists. The newfound tax base would include tourists, the underground economy and illegal aliens. The FairTax makes accommodation for the poor by providing that they (and everybody else) receive a monthly check to pre-pay the sales tax they will spend on basic necessities up to the government-established poverty level. Charitable giving in America will increase as Americans have more to give. Americans will be allowed to give all they wish in untaxed dollars. Giving to charity will be enhanced. Home ownership will be made more easily attainable when the embedded tax cost is eliminated from home construction. More Americans will be able to afford a home. Collection of the NRST specified by the FairTax will be easily accomplished since retail systems provide for the addition and billing of a sales tax. The modification of these systems would be a one-time, tax-free expense and would pale in comparison to current tax-reporting requirements. Under FairTax, businesses would incur no tax liability as they interact business- to-business. Businesses would be liable for collecting the NRST from retail customers and forwarding same to tax authorities. The FairTax legislation is the most simple of any tax proposal. Americans would be able to see what they are paying in taxes every time they make a purchase. Nothing could be more fair than the FairTax. Anyone that makes a retail purchase will be allowed to participate in funding government. The rich won't be able to avoid it. The poor (and all others) will receive recompense for tax on purchases of basic necessities. The underground economy will be required to participate. Illegal aliens will be allowed to help. Tourists to our land will help fund our government. The FairTax will allow the American economy to boom. Trillions of dollars kept offshore because of taxes will come home. Businesses won't have to make decisions based on a tax-benefit basis. America will be more able to compete in the world market when embedded tax costs are eliminated from the prices they must charge for their product. America will become home to world-wide corporate industry because of the lack of business-to-business taxation. Compliance and administration costs will amount to a small fraction of what they are now – for business, for government and for taxpayers. The FairTax eliminates 98 percent of reporting requirements. The transition to a sales tax versus the existing income tax will require thought and planning. Americans will have to become accustomed to a totally simple system. A few tweaks in retail sales-tax collection systems will take of the rest. A special consideration to implement FairTax is the calculation, production and delivery of checks to qualified heads-of-household to pre-pay their obligation for sales tax on the purchase of necessities. This consideration is offset by the system currently run by the Social Security System to provide similar checks. That system could be easily modeled, enhanced or modified to provide a solution. Over 20 million dollars was spent to develop the FairTax. The best economic minds in America were employed to develop the plan. Since then, The FairTax has been endorsed by over 75 economic scholars including a Nobel Laureate. The FairTax works. Please recommend it. Thank you, Larry Whittington |