Fair Tax For Americans Essay

1233 words - 5 pages

Fair Tax PAGE 2
Fair Tax for AmericansRussell DeSalvoCOMM105Instructor: Geraldine SmithJanuary 10, 2008Fair Tax for AmericansOur tax system today is one reason American citizens are finding it so hard to get ahead. The Fair Tax system would help all groups of Americans from rich to poor and make yearly household income non-essential at the end of the year when the time comes to calculate income tax. The current income tax system punishes families that try to live the American dream. If history has taught this country anything, progress can only be achieved by changing the standards in which we lead our lives. We need to improve our countries standard of living and our competitiveness in foreign trade markets.The Fair Tax plan would do away with federal, corporate, personal, Social Security, Medicare, estate and gift tax, and would basically eliminate the need for the IRS. In this plan the federal government would receive about 23 to 26% of sales tax collected on all new goods and services purchased across the country. With the tax rate being at 23 to 26%, the average cost of goods sold could be reduced to account for the increase in taxes. The increased tax rate would not exactly be that large because businesses today are already paying 22% to the government in hidden taxes. On average, most people pay about 15% in payroll taxes, plus any state taxes that may be required in some states. That combined with the payroll taxes that the employer must match will exceed the proposed flat tax rate. Employers today are constantly faced with raising prices of goods and services in trying to offset the taxes that burden them. In a recent study it has been noted that retailers across the country spend about $225 billion dollars annually to comply with the current tax laws. These costs are ultimately charged to the consumers and absorbed in the prices that we all pay at the cash registers. The taxes would be collected much like they are today. As the businesses collect tax from the retail customer the tax would then be submitted to the state taxing authority, then the state would be responsible for turning the taxes into the federal government. Much like today's process, the businesses and state would receive a filing fee or refund for filing the taxes properly. In order to keep the tax plan fair to low income tax payers, a rebate or "prebate" check would be issued to all American's to cover their expected monthly tax on spending. The rebate checks issued would also include all low income senior citizens to account for the groups necessities.Under the new fair tax plan the economy has the opportunity for better stimulation than it does today. Individuals who work a little more than the average person and tend to work some overtime would be able to keep the money they earned in their pockets instead of giving a good portion of the earnings back to the government in income tax. This will give the consumer the opportunity to keep more money in his or her...

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