American patriots pay their taxes. They don’t spend millions on creative accounting to avoid their obligation; they don’t pull dollars out of the US economy and park them overseas; they don’t lie about their income to get out of paying their fair share.
Like it needs to be said: Taxes are what pays for everything, including our roads, our schools, our cops, our military, our courts and all the other pieces of our infrastructure that everyone, particularly billionaires, use all the time and rely upon for our livelihoods.
So it’s telling when one party — take a guess which one — comes out against funding the Internal Revenue Service, which is still using technology from the 1980s and, due to a hiring freeze from 2011-19, is short nearly 100,000 employees.
The defunding of the IRS has been a plank in the GOP platform for most of our entire lives, and they finally got it small enough to drown in a bathtub. Now comes the next phase of the plan: The Fair Tax.
The Fair Tax is a national sales tax based on consumption, replacing our system of income and corporate tax rates with a straight-up 30 percent sales tax on just about everything. Think of it: No more tax deductions. No more IRS. No payroll tax, no income tax, no estate tax. We would collect from non-citizens every time they buy something. Even billionaires would be forced to kick in every time they got a new yacht. Prices would drop precipitously when companies don’t have to factor taxes into cost, proponents say, evening out over the long run.
And House Speaker Kevin McCarthy agreed to a vote on the Fair Tax as one of the concessions he gave to the Freedom Caucus to secure his election.
But like most of the ideas espoused by the Freedom Caucus, it is a terrible one.
It’s regressive, for one, benefiting the rich at the expense of the poor. Low-income households spend a much greater percentage of their income on consumer goods than wealthy households. Also, at 30 percent, it won’t raise as much money as our current tax system. In 2011, when Mike Huckabee was touting the Fair Tax, the Institute on Taxation and Economic Policy estimated that the national sales tax would need to be between 45-40 percent to maintain our current revenue stream.
And while advocates say the Fair Tax is formulated to include Social Security payments, we have serious doubts about the sanctity of the program once individual accounts are no longer tabulated. It also penalizes seniors on fixed incomes, who will be spending 30 percent more but taking home the same amount as before. The only ones who would see a reduction in taxes, according to the Brookings Institution which analyzed the Fair Tax back in 1998, are the top 1 percent, who would save about $75,000 per year in 1998 dollars.
Granted, our tax system sucks and needs reform — that’s what the 87,000 new IRS agents and boost in budget is supposed to address. But beware of those who would replace it with something worse for everyone but them and their friends.
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