Our New Tax Code. Pick one!
by Herman Cain
The good news is that there are three great options for replacing our complex, unfair and outdated century-old tax code. The bad news is that the political class uses this as an excuse to not do anything, so they can continue to use the current system to award favors to their political friends at the expense of us, the workers and the taxpayers.
This is why we must unite behind one solution. That way, instead of Big Brother shoving something else down our throats, we the people the working class will shove a solution up their . . . well, you know what I mean.
Replacing the tax code is one of the most critical changes this nation can make in order to super-charge our economy, put power back in the hands of the people, eliminate a $400 billion-a-year compliance cost on us, and eliminate the corruption and intimidation of the IRS.
Only a fool or a power hungry bureaucrat would want to keep the complex, unfair 74,000-page tax code we have today. It is modern day slavery, and we must free ourselves, because the political class has shown for decades that it will not do it for us.
The escape plan for tax code freedom is to first unite behind one of the great plans which have already been developed. Then, create a massive national movement to make this plan the law of the land. And then, voters must demand that candidates running for the White House or Congress commit to the plan before they get our votes, and before they get elected.
Here is a brief description of each great plan: The Fair Tax, the Flat Tax, and the 9-9-9 Plan.
The FairTax is a revenue-neutral, single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. It includes:
A 23 percent (of the tax-inclusive sales price) sales tax imposed on all retail sales for personal consumption of new goods and services.
While permitting no exemptions, the FairTax provides a monthly universal prebate to ensure that each family unit can consume tax-free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application. As a result, a person spending at the poverty level has a 0 percent effective tax rate, whereas someone spending at twice the poverty level has an effective tax rate of 11.5 percent, and so on.
NEW FLAT TAX
The Heritage Foundation's New Flat Tax (NFT), part of Saving the American Dream, replaces today's complex tax system with one that is simple and fair. The New Flat Tax is simple, revenue-neutral, and will allow America to achieve its full economic potential. Among the details:
Currently, in addition to the income tax, the federal government imposes a payroll tax, death tax, and a slew of excises. The New Flat Tax replaces them all for individuals, families, and businesses with one tax system with one tax rate of roughly 28 percent.
Two Tax Credits: The New Flat Tax retains the Earned Income Credit to preserve the level of income support for low-wage workers. And low- and middle-income families also receive a tax credit of $3,000 ($2,500 for singles) toward the purchase of health insurance.
Three Deductions: The only remaining deductions are for higher education, gifts and charitable contributions, and an optional home mortgage interest deduction.
In 1996 Steve Forbes supported a flat tax of 17 percent on all personal and corporate earned income (unearned income such as capital gains, pensions, inheritance, and savings would be exempt.) He supported keeping the first $33,000 of income exempt.
The revenue neutral 9-9-9 plan would replace all current taxes, including the payroll tax, capital gains tax, and the estate tax and taxes on repatriated profits. The plan would establish the following:
A 9% corporate flat tax. Businesses would deduct purchases from other businesses and all capital investment. The resulting gross income is taxed at 9 percent.
A 9% personal flat tax. Individuals would deduct charitable contributions, then pay 9 percent on the rest of their income. Capital gains are excluded.
A 9% national sales tax. This levy would be placed on the consumption of all new goods. Used goods purchased would be excluded.
Details of each can be found in various sources on the Internet, books and articles. These descriptions give you the key features of each. I will be asking you and your friends to vote for ONE in the coming weeks. Based on the results we will create a compelling movement.
The political class has divided and abused us for decades with the current tax system. United, we can take our government back.