A group called South Carolina FairTax sponsored the recent RedState gathering in Charleston. The group is in the vanguard of the so-called Fair Tax movement, advocating on the state level what has been discussed on the federal level for many years.
South Carolina state rep Bill Taylor addressed the RedState gathering to explain the advantages of a Fair Tax system.
Fair Tax will eliminate current tax collection systems and agencies. It will replace them with streamlined collection systems under which citizens automatically pay taxes when they purchase goods or services, like a state sales tax.
On the federal level, a Fair Tax would require imposition of a new federal sales tax on all goods and services while eliminating current income taxes, the current collection system and the Internal Revenue Service (IRS) itself. This will do away with the costly and complicated burden of filing tax returns and sometimes being audited, along with the $11+ billion cost of operating the IRS itself.
Nine state senators are sponsoring the South Carolina Fair Tax legislation which will eliminate present state income taxes and sales taxes and will have the following advantages according to www.scfairtax.org
‘It eliminates state income taxes on households and businesses, saving them thousands $$$. It includes a monthly Prebate check which pays for sales expenses for groceries, medicine, etc. It only taxes new retail goods and services at the point of sale. It simplifies our state tax code and eliminates the SC 1040 income tax form. It treats all taxpayers and businesses the same. It provides a 6% base sales tax which brings in the same amount of money for the State government as our current tax code.’
The fact that the South Carolina group is working on the state level truly is a revolution. South Carolina is certain to institute a Fair Tax long before the federal government.
American Democrats and liberals oppose the Fair Tax on any level because the present system is yet another bureaucratic imposition on productive Americans under which the political left uses the IRS and state agencies as tools of control, intimidation and harassment, and to keep public-sector workers employed on the public dime.
Why a Fair Tax? In a word, simplicity. First, most people who actually pay taxes already are working hard. Second, the existing tax filing system is an additional imposition on their busy lives. So third, imagine that hard-working citizens never had to fill out another tax form. That certainly sounds like a good idea.
According to the Heritage Foundation in 2007, based on figures from The Tax Foundation:
‘All taxpayers, not just small businesses, face rising compliance costs. Americans spent billions of hours and an estimated $279 billion filling out their federal income taxes last year alone.’
That’s $279 billion… Not in taxes but just in lost personal time and direct money outlays to pay the preparers, accountants and lawyers. In other words, it costs you more and more money just to pay more and more in taxes. Imagine what $279 billion and all that personal time could do to spur economic growth if it were directed toward investment in new businesses rather than to lawyers and accountants and tax calculations.
In another fact from the Tax Foundation:
‘The full cost a tax system is more than the amount of tax paid. It also includes the cost of tax planning and paperwork. Economists call these “tax compliance” costs, and the IRS estimates Americans spend 6.6 billion hours per year filling out tax forms—including 1.6 billion hours on the 1040 form alone. In 2002 Americans spent roughly $194 billion dollars on tax compliance. That amounts to 20 cents of compliance cost for every dollar collected by the tax system.’
Thus SC FairTax is part of a global trend toward tax simplification that is proving to be highly beneficial to economic growth. Even Russia now has a flat tax – one simple rate on your income with no deductions and no paperwork – which is another way to eliminate the existing system.
The South Carolina Groups prefers a Fair Tax system, saying that it has the following advantages:
*Your take-home pay will increase immediately after the FairTax Act becomes effective as taxes are no longer withheld from your paycheck. You no longer have to keep records or fill out and file incomprehensible tax forms. Best of all, as the business climate improves dramatically and there is more competition for good employees, your value to your employer increases and your wages increase accordingly.
*The South Carolina FairTax will work because it applies sales taxes to all NEW retail goods and services. It becomes a consumer tax, not a production tax, therefore people are only taxed on items they purchase not on products they manufacture. This will greatly draw businesses to South Carolina. The amazing thing about SCFairTax is that it is NOT NEW. Every component has already been successfully employed in one state or another, and on occasions some have been partially implemented nationally. What makes the SCFairTax proposal unique is that it is the first time all of these great ideas will be implemented at the same time.
*We already have a flat state income tax. Anyone with a full-time job pays the top 7% rate. The South Carolina FairTax Act ends taxation on income for all households and businesses. The FairTax taxes consumption so there is no need to file a tax return. The flat tax taxes income. In 1986, the tax code was revised to contain just two tax brackets. There have been well over 16,000 changes to the tax code since then. It is time we take back the power of authority in “We the People”.
*The prebate is a monthly payment which covers all sales tax expenses on retail spending up to the poverty level. This means a lawful family of 4 would have to spend more than $2400 per month on retail goods and services before they ever paid a penny in sales tax! The amount of the prebate is based on household size. The prebate completely untaxes the poor and increases disposable income for the middle class.
In addition, says the website, the Fair Tax system:
Empowers families to keep thousands more of their money. Increases consumer spending, which drives 70% of our economy. Removes state income and sales taxes from South Carolina businesses, enabling them to expand and hire. Incentives for entrepreneurs and wealthy retirees to relocate to South Carolina, leading to increased home sales and job growth. Monthly Family Consumption Allowance or Prebate untaxes the poor and increases disposable income for the middle class. The ‘prebate’ pays for the sales taxes on the first $2400 in retail spending for a family of 4.
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