A Fair Tax System?
by Andy Obermann

Republican Speaker of the House Dennis Hastert (R-IL) raised eyebrows on Capitol Hill last week when he announced his belief that the Internal Revenue Service and personal income tax should be abolished.

In his upcoming book, "Speaker: Forty Years in Coaching and Politics," Hastert reveals his belief that America would be better off under a tax system based on consumption -– such as a national sales tax on goods and services. Supporters of this plan, known as the Fair Tax System, rallied behind Hastert to put this issue front and center for the November election.

Taken in combination with greatly needed spending cuts, a national sales tax system would lead America into a period of economic prosperity, possibly greater than any before. In researching the Fair Tax System, I have come to the conclusion that it is a reasonable solution to our current income-based tax system.

First and foremost, under the Fair Tax System, Americans would keep 100% of their earnings. There would be no federal deductions via payroll taxes. All federal revenue would be raised through a national sales tax on goods and services. States would still be able to derive revenue from payroll taxes, but the federal government's hands would be completely off income. Taxes on business would be revoked, too. This alone would substantially increase capital investment. Private sector expansion equals more jobs for the American people and higher wages to boot.

The Fair Tax proposal would simplify the current tax code – completely eliminating tax returns and deadlines. Federal revenue would fully fund government. Many critics agree that the system seems sound, but worry about its impact on the poor. This has also been addressed.
The federal government, considering cost of living adjustments, would send monthly rebates to families spending less than one would at the poverty level to cover the cost of life necessities and ensure that they do not pay an unjust tax rate.

The final reason this plan makes sense is simply America is a nation of consumers. Rather than punishing the wealthy for being successful (as our current "progressive" tax system does), it will tax based on lifestyle. This makes the entire system "fair." If one leads a more extravagant lifestyle, he or she will pay more in taxes. If one chooses to purchase luxury items, such as private jets and million dollar mansions, they will pay their due taxes for that choice. Those who choose to buy a used car and home will pay no taxes, since, under this system, used goods are tax exempt. This creates a truly fair and progressive system based on one's lifestyle and spending choices.

Despite the "makes sense" essence of the Fair Tax System, the Bush Administration has rejected the proposal. It seems the president has failed to realize that economic issues will play a major role in the upcoming election – not at the level of national security and terrorism, but an important one nonetheless. The Bush tax cuts have stimulated the economy and our current period of growth is impressive and solidly on track. But this new initiative could make the economy really hum.

An endorsement from the president now is necessary to put this critical issue before the voters and before Congress during a second Bush term.

Andy Obermann is a 22 year old senior at a small private college in central Missouri. He is majoring in both history and secondary education at Missouri Valley College in Marshall, MO.