Remember what President Bush told us to do in the days following 9/11? Loosely paraphrased: “Go shopping. Go travel. Go see DisneyWorld.” In other words, the best way to fight the terrorists was to keep feeding our good-old-fashioned-American-materialism. And many of us followed his advice. We pillaged the equity in our houses and maxed out our credit cards to pay for new cars, houses full of electronics, and expensive vacations.
But now, there’s a surprising number of politicians who are considering a massive change that will make us think twice about our orgy of consumption: replacing the income tax with a nationwide 23% sales tax. It’s called the FairTax, and here’s how its backers describe it:
The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.
The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
I heard about this a few months ago and immediately forgot about it, thinking it would never fly. They’re talking about completely shutting down the IRS, for crying out loud. You just can’t do that, right?
That’s what I assumed until I heard this week that Fred Thompson is coming into the presidential race as a big supporter of the FairTax. And five other candidates are jumping on board as well. This is going to become a major issue in the next year.
From what I could tell by a brief glance through the website, my family would probably pay more in taxes through this system than we do now. Still, I’d be very interested to see what effect it would have on our unnecessary spending to pay a 23% premium on everything we bought.