Response to request for comments # 2 by the Federal Tax Reform Panel.
Individual submission
Tim Phillips
535 Red Chimney Dr.
Warwick, RI 02886
401-885-3112
tphillips42301@msn.com
April 26, 2005
Dear Chairman Mack and Panel members,
I highly recommend and advise changing the current tax system to the FairTax
plan.
The FairTax (HR 25 / S 25) provides for a National Retail Sales Tax instead of an
income tax.
I encourage you to consider the FairTax and recommend it as the solution. The
FairTax system addresses all the specifications set forth by President Bush as
required in a new tax system.
The FairTax promotes a consumptive 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 will be sufficient to fund
government at current levels. The change in how taxes are collected will not
effect the amount of money needed to fund what government does. What’s
more, it will cost our government less to collect all these revenues.
The FairTax distributes the burden of tax-paying over a much broader tax base.
The newfound tax base would include tourists, the underground economy and
illegal aliens. In short, anyone buying goods and services here will be
contributing to the funding of our government.
The FairTax accommodates the poor by providing that they (and
everybody else) receive a monthly check to pre-pay the sales tax they will spend
for basic necessities up to the government-established poverty level.
Charitable giving in America will increase because Americans willhave more to
give.
Privately funded research facilities will benefit as Americans give to these vital
institutions doing very important work. What price can we put on this?
Home ownership will flourish when the embedded tax cost is eliminated from
home construction. The result, more Americans will be able to afford a home
and the service industry will continue to boom as homeowners improve their
homes.
Collection of the NRST under the FairTax plan 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 the cost ($240 billion annually) and complexity of the
current tax-reporting requirements which represent near 60,000 pages!!.
Under the FairTax plan, 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 that tax to authorities.
The FairTax plan is the most simple of any tax proposal and the genius is in the
simplicity. Remember the KISS principle, Keep It Simple Stupid!
Nothing could be more fair than the FairTax. Anyone that makes a retail
purchase will be participating in funding our government. The poor (and all
others) will receive recompense for tax on purchases of basic necessities. The
underground economy won’t be able to escape. Illegal aliens will participate.
Tourists that our country will help fund our government.
The FairTax plan will cause the American economy to flourish. Trillions of dollars
kept offshore because of the ridiculous tax code we are now cursed with will
come home. Businesses won't have to make decisions based on a tax-benefit
basis nor suffer double taxation as many corporations currently do! America will
be better able to compete in the world market when they are relieved of the
tremendous burden of embedded tax costs and those costs are eliminated from
the prices they must charge for their product. Because there is no tax on
Business to Business transactions, America will be flooded with new opportunity
as businesses worldwide clamber to set up shop here.
Compliance and administration costs will amount to a small fraction of what they
are now ($240 billion)– for business, for government and for taxpayers. The
FairTax eliminates 98 percent of reporting requirements.
The transition from the current monster we call the IRS to the consumptive
FairTax plan will require some thought and planning. Americans will become
accustomed to this very simple system quickly. A few tweaks here and there in
retail sales-tax collection systems and we’re off and running.
A special consideration to implementation of the FairTax plan is the calculation,
production and delivery of compensation 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.
It took over $20 million dollars to develop the FairTax plan. The best economic
minds in America were employed to create it. Since then, The FairTax
has been endorsed by over 75 economic scholars including a Nobel Laureate.
The FairTax is far superior to anything else being trotted out. I highly encourage
you to recommend it.
Thank you,
Tim Phillips