The FairTax: Why a 23% Consumption Tax isn’t as bad as you might think.

The FairTax is a proposal that economists have predicted will instantaneously jumpstart the economy, by increasing the economy 10%. Capital spending is projected to grow by 70%. And the FairTax will favor nobody: not poor, not rich, not oil companies, not car companies. It’s a very simple plan, but it never seems to get off the ground.

Every time I start thinking about the income tax versus the FairTax, it surprises me how different they are. And it always surprises me that people don’t jump on the bandwagon right away, and get this FairTax in place. But every time I think that, I have to remember the 23% sales tax.

Yes, the FairTax institutes a 23% national sales tax. Yes, that’s on top of your current state sales tax, if you have one. And that is why the critics have been very successful in keeping the FairTax out of the realm of legitimate ideas.

I mean, how easy is it to destroy an idea by going around shouting “23% sales tax! 23% sales tax! That’s like a quarter out of every dollar you spend! Are you crazy!?!” Instantly, anyone who was considering the sales tax cringes in shock and decides they would rather stick with the horrendous income tax, and the FairTax bill fails yet again.

There is a single point that blows this awful reasoning out of the water, but nobody gets far enough into the FairTax to actually hear about it. Have you heard about embedded taxes? A lot of people don’t even consider them. Do you realize that about 22% of the cost of every product is due to taxes somewhere along the line of production?

Say, for instance, that you go to the store and buy a box of Cheerios. You pay for the Cheerios at the checkout, pay your state sales tax, and leave, thinking you only suffered a bit from the state’s taxation. But in reality, you’re not the only one who has paid taxes on that same box of cheerios. There were taxes on it all throughout the production of the Cheerios themselves, the box, the sealed package that it’s in.

 Now, I don’t know if Cheerios has a 22% embedded tax exactly, but that is the average for every product in the US. So why can’t people understand that if the FairTax replaces every other Federal Tax, that these embedded taxes will either go away or severely decrease, leaving the customer with a product that will have the same price as it did before the tax switch.

Let me guess. Now you’re going to ask me why it’s such a big deal if the price of products is going to stay the same. Yes, you are a typical American if you asked that. No, you haven’t thought this through yet. The FairTax replaces every other Federal tax. Has it hit you yet? Prices might stay the same, but the biggest deal is that you won’t be paying an income tax! That 35% or so that is taken out of your paycheck every two weeks will be yours to keep! Think about that a moment. Your take-home pay will increase by 35%! If you don’t think that will fire up the economy, you need to think again!

I have always been a fan of keeping things simple. And the FairTax keeps it simple, believe me. Besides, it is sheer stupidity to lost huge amounts of money to compliance costs, offshore markets, and corporate tax exemptions. These things sound like boring technicalities, but where the income tax fails, the FairTax shines.

There is no arguing against the fairness of the FairTax, or against the logic behind it, or even against the amount of revenue it takes in. But every time, people get scared off by their politicians, who defend the income tax, their favorite way to fight a class war. If you want to read more about that, go here: http://hubpages.com/hub/The-Income-Tax-Strangling-Americas-Freedom.

However one-sided and illogical the arguments of the critics are, I’m confident that once the American people realize what the FairTax really is, they will wholeheartedly accept it. Since you are one of the privileged few that have learned why a 23% tax is not going to raise prices by 23%, you need to share your knowledge. And you need to learn more by going to www.fairtax.org.