Response to request for comments by the Federal Tax Reform Panel March
8, 2005 Ryan McGuire FNP, CCE 1826 Valence ST New Orleans, La 70112
Rymcg2002@yahoo.com
\<[[mailto:Rymcg2002@yahoo.com]{.underline}](mailto:Rymcg2002@yahoo.com)\>

Please consider a fairtax plan such as HR25 now that President Bush is
asking for comments \>

The FairTax is a federal retail sales tax that replaces the entire
federal income and Social Security tax systems, including personal,
gift, estate, capital gains, alternative minimum, Social
Security/Medicare, self-employment, and corporate taxes. The FairTax
allows Americans to keep 100 percent of their paychecks (minus any state
income taxes), ends corporate taxes and compliance costs hidden in the
retail cost of goods and services, and fully funds the federal
government while fulfilling the promise of Social Security and Medicare.

The income tax exports our jobs, rather than our products. The FairTax
brings jobs home. Most importantly, U.S. exports are not burdened by the
FairTax, as they are with the current income tax. So the FairTax allows
U.S. exports to sell overseas for prices 22 percent lower, on average,
than they do now, with similar profit margins. Lower prices sharply
increase demand for U.S. exports, thereby increasing job creation in
U.S. manufacturing sectors. At home, foreign imports are subject to the
same FairTax rate as domestically produced goods. Not only does the
FairTax put U.S. products sold here on the same tax footing as foreign
imports, but the dramatic lowering of compliance costs in comparison to
other countries\' value-added taxes also gives U.S. products a
definitive pricing advantage which foreign tax systems cannot match.

All Americans take home their whole paychecks. Not only do more
Americans have jobs, but they also take home 100 percent of their
paychecks (except where state income taxes apply). No federal income
taxes or payroll taxes are withheld from paychecks, pensions, or Social
Security checks. Retail prices no longer hide corporate taxes or their
compliance costs, which drive up costs for those who can least afford to
pay. Did you know that hidden income taxes and the cost of complying
with them currently make up 20 to 30 percent of all retail prices? It\'s
true. According to Dr. Dale Jorgenson of Harvard University, hidden
income taxes are passed on to the consumer in the form of higher
prices - from 20 to 30 percent higher than they would otherwise be - for
everything you buy. If competition does not allow prices to rise,
corporations lower labor costs, again hurting those who can least afford
to lose their jobs. Finally, if prices are as high as competition allows
and labor costs are as low as practical, profits/dividends to
shareholders are driven down, thereby hurting retirement savings for
moms-and-pops and pension funds invested in Corporate America. With the
FairTax, the sham of corporate taxation ends, competition drives prices
down, more people in America have jobs, and retirement/pension funds see
improved performance.

The FairTax strategy is revenue neutrality: Neither raise nor lower
taxes. If you were in a 23-percent income tax bracket, the federal
government would take \$23 out of your paycheck for every \$100 you
made. With the FairTax, if the federal government gets \$23 out of every
\$100 spent in America, the same total revenue is delivered to the
federal government. This is revenue neutrality. So, instead of
paycheck-earning Americans paying 15.3 percent of their paychecks in
Social Security/Medicare payroll taxes, plus an average of 18 percent of
their paychecks in federal income tax, for a total of about 33 percent,
consumers in America pay only \$23 out of every \$100 they choose to
spend on new goods or services for their own personal consumption. And
this tax is collected only on spending above the federal poverty level,
thus making the tax rate zero up to that level.At this rate, the FairTax
pays for all current government operations, including Social Security
and Medicare. Government revenues are even more stable and predictable
than with the federal income tax because consumption is a more constant
revenue base than is income.

No tax on used goods. No tax on business inputs. With the FairTax, if
you choose to buy any new good or service, the sales tax is charged just
as state sales taxes are computed today. If you choose to buy used
goods - used car, used home, used appliances - you do not pay the
FairTax. If, as a business owner or farmer, you buy something for
strictly business purposes (not for personal consumption), you pay no
consumption tax. So, in deciding what to buy, you get to choose whether
or not you pay the federal consumption tax.

No federal sales tax up to the poverty level means progressivity like
today\'s tax system. Furthermore, to ensure that no American pays tax on
necessities, the FairTax plan provides a prepaid, monthly rebate for
every registered household to cover the consumption tax spent on
necessities up to the federal poverty level. This, along with several
other features, is how the FairTax completely untaxes the poor, lowers
the tax burden on most, while making the overall rate progressive.
However, the FairTax is progressive based on lifestyle/spending choices,
rather than simply punishing those taxpayers who are successful. Do you
see how much freer life is with the FairTax instead of the income tax?

Tax criminals - don\'t make criminals out of honest taxpayers. Today,
the IRS admits to 25 percent non-compliance with the code. FairTax.org
will be generous and simply take the position that this is likely a
conservative estimate of the underground economy. However, this does not
take into account the criminal/drug/porn economy, which equally
conservative estimates put at one trillion dollars of untaxed activity.
The FairTax taxes this - criminals love to flash that cash at retail -
while continuing to provide the federal penalties so effective in
bringing such miscreants to justice. The substantial decrease in points
of compliance - from every wage earner, investor, and retiree, down to
only retailers - also allows enforcement to concentrate on following the
money to criminal activity, rather than making potential criminals out
of every taxpayer struggling to decipher the code.

Ryan J. McGuire FNP, CCE