Keeping with yesterday’s theme of watching President Barack Obama as he considers raising taxes on the middle class, I thought today would be the perfect time to talk about a book that I recently completed: The Fair Tax Book – Saying Goodbye to the Income Tax and the IRS. This book, by Neal Boortz and Congressman John Linder, contemplates an entirely new tax code for the United States of America. Boortz and Linder consider a whole new system – one based off of a consumption tax.
What is a consumption tax? It means that everything a person purchases is taxed at between 22% and 23%. But wait! That’s the only tax that anyone ever has to pay – ever. No income taxes, no business taxes, no capital gains taxes – nothing. You name a tax other than a consumption tax and it doesn’t exist. Another thing to keep in mind is that the tax is only assessed once. For example, if you buy a brand new car, you pay the tax. However, if you buy a used car – no tax. The Fair Tax is only assessed once.
The other critical point to remember under the Fair Tax is that each household in America would be reimbursed on a monthly basis for a dollar amount equal to what they would spend on basic goods. This immediately removes the argument that poorer citizens would be facing an undue burden under the Fair Tax. They wouldn’t be facing that burden because the government would provide each American household with a subsidy equal to what they would typically spend each month on consumption taxes for basic necessities.
There is obviously too much to go into in this small space. However, if you are interested in government reform or new ways for America to meet its obligations to its citizens, then I would recommend reading this book. I was completely against a Fair Tax when I first picked up this book, but after reading it I am convinced that it could be a great step forward for America in the new world economy.