Tax day is often marked by many political events objecting to our nation’s tax policies. This year will be no different, as tea party groups and advocates for tax reform will be out in full force across the country.
Americans are upset with Washington, and it is easy to see why. Government dependency and spending is up, while nearly half the households in America (47%) will pay no federal income taxes this year. Meanwhile, Gallup reported this week that 63 percent of Americans believe their taxes will increase in the next 12 months. Private sector jobs are increasingly difficult to obtain, and special interest groups control the agenda on Capitol Hill.
Many wrongly claim that only the “rich” are affected by high tax rates. In reality, the average American worker surrenders 27 percent of his earnings to federal, state and local governments, meaning the average American gives three months of his annual earnings to government.
Despite this high percentage, liberals in Congress want to take even more money out of the pockets of American workers by pursuing an agenda that increases taxes to pay for the policies being handed down by Nancy Pelosi and signed by Barack Obama. Liberals in Washington are spending the federal government into a record deficit of $1.5 trillion dollars this year alone.
America cannot continue down the current path because our spending levels are unsustainable. Spending needs to be cut and our method of taxation needs to be changed.
To reign in government spending, I introduced H.Res.323, the Cut the Unnecessary Tab (CUT) Resolution. This resolution requires that rescission bills be brought to the House floor at the beginning of every fiscal quarter to give Congress the opportunity to cut and cancel unnecessary, wasteful government spending.
At the rate Congress is going right now, our grandchildren will never climb the mountain of debt America is accumulating. The CUT Act will change the way the federal government spends taxpayer dollars by allowing any Member of Congress to offer an amendment to cut wasteful federal spending and require a recorded vote so every Member is held accountable. The CUT Act will be an important step toward Congress finally balancing the budget and reducing the waste of taxpayer dollars.
But controlling spending alone is not enough to put our government on a fiscally sustainable path. We need to fundamentally reform the American tax system by abolishing the IRS and replacing our system with a national sales tax.
The FairTax – a national consumption tax – would abolish the IRS and allow Americans to keep 100 percent of their paychecks. Under the FairTax, the take-home pay of American workers will increase by an average of 56 percent by replacing federal personal and corporate income taxes and a litany of other taxes including gift, estate, capital gains, interest income, dividends income, alternative minimum, Social Security, and Medicare taxes with one simple retail sales tax.
Remember, businesses do not pay taxes. Instead, they pass them along to their customers who end up paying them. In reality, businesses collect taxes from their customers and pass them along to government.
Think of a business as two services. One provides the product you purchase, and the other is a hidden, built-in price reserved for the federal government.
Both consumers and small-business owners will benefit from the FairTax. Taxes on business currently make up 22 percent of all retail prices. Therefore, if the FairTax replaced the federal income tax system, prices would drop 22 percent – the cost of complying with the current tax code.
Right now every business must calculate the tax compliance implications of all its business decisions. Government tax collectors audit an ever higher percentage of tax returns and taxpayers pay high fees for tax preparation. Fewer and fewer Americans fill out their own taxes out of fear of an IRS audit. The recently passed Obamacare legislation authorizes as much as $10 billion dollars for the IRS and will enable the IRS to hire 16,000 to 17,000 new agents to force compliance.
The FairTax repeals the entire federal income tax code and abolishes the IRS completely – lock, stock, and barrel. It liberates every American to earn all the reward of hard, smart work. Under the FairTax, there is no tax penalty for earning, saving or investing.
Everyone is free to choose to pay their taxes when they make a decision to purchase. This will unleash the American economy, enabling it to soar upwards to a new level and reestablish dominance in the world.