Roundhouse kick the IRS

By Jacob Vial

I got two of my favorite calls this week. My former employer called me for the best address to send me my tax forms and my mom called to see how much money I had spent on books. Her question was followed with a reminder not to spend too much more or I wouldn’t have money to pay my taxes. Implication: I may take season two of Walker Texas Ranger back this week. There weren’t too many roundhouse kicks or Indian spirit moments anyway. After all, the government deserves my money more than Mr. Norris does.

If I were Chuck Norris, trained by Bruce Lee with the ability to form out of body experiences, I would probably leave my body and deliver a sound roundhouse to every lawmaker who helped make today’s tax code. But even Walker would get tired, because our system is the result of thousands of lawmakers and lobbyists and decades of codification. Our archaic system employs thousands of people and costs billions of dollars in compliance fees. It would be great to return to the days of old when one tax lawyer with a pencil could be the accountant for all of Texas. Fortunately, we can.

The solution lies in H.R.25, the Fair Tax Act of 2005. H.R.25 calls for the repeal of individual income taxes, corporate income taxes, capital gains taxes, estate taxes, Social Security and Medicare taxes and others that are lesser known. The legislation replaces these taxes with a 23 percent sales tax levied on all retail purchases. 23 percent allows the government to collect the same amount of money it currently brings in while solving the problems of our current system.

Before I begin receiving hate mail to the tune of “Jake Vial hates poor people,” I must explain that the legislation also calls for a “prebate” consumption allowance. The 23 percent tax on the required spending for basic consumption (adjusted for sizes of household) is paid back to all consumers by the government. This means individuals are taxed only on what they spend beyond what they need.

Opponents of the legislation argue that eliminating corporate income taxes will place the entire tax burden on individuals allowing businesses to profit. The truth is that every tax levied is already passed on to the consumer. In the supply chain, taxes are passed down until they end up in the laps of Cordell Customer or Trivett Employee as an increased price for goods or a decrease in wages. Former head of the Harvard Economics Department, Dr. Dale Jorgensen concluded that 22 percent of the prices of consumer products represent taxes. Since every business that has a hand in making the product passes the cost of taxes on, it is clear how quickly the sum can add up. We’re already near the 23 percent simply by getting rid of just embedded taxes alone.

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You are now ready to invest your money tax-free and spend it when you need it. Currently you pay the government every paycheck, cannot earn interest on what you withhold and get excited on April 15 if the government returns your money to you. With the FairTax system, you earn interest and pay taxes only when you choose to. Other benefits are passed down to the consumer as well.

Businesses are no longer concerned with the willingness of their consumers to pay for additional tax burdens. They will invest in projects that will increase their earnings without increasing the costs of their products. Companies will quit fleeing the country to find income tax havens in Bermuda. These implications mean more jobs and money for the American workforce.

Other savings exist. They involve more economics than I care to explain in a seven hundred word column, but I will opine that the FairTax ensures that our underground economy is taxed, offshore bank accounts disappear and the U.S. will become the tax haven for international corporations.

Talk show host Neal Boortz and Congressman John Linder explain more in a book titled “The FairTax Book.” Buy the book and you can help increase their income and their tax burden.

I have a few more episodes of Walker to attend to.