This year, Georgia Republicans will have the choice to vote for the Fair Tax on the party’s May 21st primary ballot. Supporting the Fair Tax is a decision all taxpayers should consider. Here’s what would happen federally if the Fair Tax, first introduced in Congress in 1999, became law:
1. The U.S. economy would explode. Trillions of dollars offshore will be repatriated because there will be no tax event in doing so. A study shows that capital spending in the first year after passing the Fair Tax will increase 70 percent. That increases productivity and it is estimated that the GDP will grow in the first year by 10 percent.
2. Manufacturing will return to the United States. Former Ways and Means Committee Chairman Bill Archer often quoted an informal study of many international businesses that are headquartered overseas. When asked what they would do in their long-term planning if we eliminated all taxes on capital and labor and taxed only personal consumption, 80 percent said they would build their next plant in the US. And 20 percent said they would relocate their headquarters to the US.
3. With a monthly prebate, the poor will not be taxed– and consumer prices will fall dramatically.
4. For the first time, we will tax expenditures instead of wages.
5. Businesses will make business decisions based on what is best for their shareholders, employees, and customers– not what is best for their tax burden.
6. We will finally tax the underground economy which, 15 years ago, was estimated at $3 trillion a year. Illegal immigrants will also pay their fair share.
7. We will save Americans nearly $1 trillion spent each year on IRS paperwork.
8. Churches will be able to conduct themselves as they see fit without IRS agents listening to their sermons. And the Johnson Amendment will no longer mean anything.
9. The Fair Tax would replace the federal individual income tax, corporate income tax, payroll taxes, the estate tax and the gift tax.
A 2009 poll concluded that, given a description of taxing income or consumption, the sales tax wins. In 2012, a study was done that concluded that if we were on the Fair Tax instead of the income tax during the financial crisis that year, we would have collected 10 percent more in revenue.
Consumption taxes work. Federally, we already have consumption tax on cigarettes, airline tickets and alcohol. As an example, in Monaco, all residents pay tax in the form of a 20 percent value-added tax on all goods and services. Monaco’s tax system is designed to generate revenue primarily from consumption rather than income, and Monaco has some of the highest concentrations of wealth in the entire world. They choose a just and fair consumption tax instead of weaponizing their tax code, and this is to their benefit.
You will be told that the Fair tax is hard on the poor, but we will send a cash advance every month – the prebate — to every family, based on the size of the family. It will offset the tax cost of spending on necessities. That is defined each year by the government as poverty level spending. The prebate, in many ways, is a form of a basic income– which should appease all the left-leaning voters who want affluent citizens to pay more tax.
By the way, the prebate only goes to legal residents!
The Fair Tax percentage rate is set as an “inclusive” tax, and the rate is 23 percent on the personal consumption of all new goods and services. Opponents will argue that it is a 30 percent tax when compared with a state sales tax which is on top of your spending or an exclusive tax. The Fair Tax is 30 percent on top of what you have to spend. The average income tax, of those who pay income tax, is 14.6 percent plus the payroll tax of 7.65 percent, or 22.25 percent.
In other words, the burden is about the same, but with the Fair Tax you keep more of your own money.
Gov. Brian Kemp signed HB 1437 into law on April 26, 2022. The new law replaced the personal income tax rate with a flat rate of 5.49 percent. This took effect Jan. 1, 2024. There will be gradual rate reductions until the tax rate reaches 4.99 percent. And it is estimated that Georgia taxpayers could save $1.1 billion by 2024 and $3 billion over the next ten years.
As for the Fair Tax, while we still have a fight ahead to make it a federal law, it is getting closer and closer to reality in Georgia. Make sure you vote yes to the Fair Tax on this year’s GOP primary ballot.
The Fair Tax act was authored by then-U.S. Rep. John Linder, R-Ga., in 1999 and resulted in a New York Times bestseller, co-written by Linder and Neal Boortz. Styled as the “FAIRtax,” Linder and Chadwick Hagan both serve on the national board of the FAIRtax organization. Read more at www.fairtax.org
