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Finished, and Convinced: The FairTax Makes Sense

[1]You may recall a few months ago I mentioned I had started reading [2] The FairTax Book. It only took about 5 or 6 hours of reading time, but it kept bouncing around in priority, and I just finished a couple of days ago.

It is really tough to explain the whole idea in a few short sentences (making the book a great resource if you want to be able to speak intelligently to the subject). I was cynical of the idea before reading the book, and now I’m convinced it is the right way to both solve our current tax issues and help stimulate our sadly sagging economy.

Forgive me if I make this sound too simple, and I know it really isn’t, but what the I got out of it in a nutshell:

First of all, the numbers and impact assessments referenced in the book have been researched by economists… obviously, we have to take that with a grain of salt, and even the writers (Neal Boortz and Congressman John Linden) will state that there will be some painful periods and that not everything will work out exactly as expected. That said, I am operating, for the sake of discussion, on the assumption that the economists in question got it right.

I don’t need to go into all of the setup around how evil our current tax system is. That said, even reading the first few chapters of the book and getting an understanding of the history around our income tax system is enough to get one a little hot under the collar.

The basic contention is that all of the products and services we pay for today have approximately a 22% embedded tax cost. That means out of a $100 purchase, $22 goes to pay income taxes, corporate taxes, Social Security and Medicare taxes. If we eliminated all of these embedded taxes, pay the same $100 but have 23% ($23) passed on as a consumption tax (on all new product sales and services), we would experience the following:

Some of this assumes that the people keep the politicians honest after the new system kicks in. It requires some careful thinking to truly understand the idea… don’t be tempted to believe you understand it without digging into the details. I’m glad I went through the effort.

The Conservative Reader supports The FairTax Act (HR 25 and S 1025). For more information, read the book [1], or go to the FairTax website [3]. Then, contact your Representatives and Senators in Congress. This has already taken too long to accomplish.

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#1 Pingback By Nightly Ramble:Taxes, Expelled to a future date, Penn, more | BitsBlog On May 9, 2008 @ 2:59 pm

[…] Art… I have seen the book as well. I have to tell you and honesty I found a depressing read. The reasons are rather simple; […]