Give Every American Family A Raise

(Average Family making $50,000/yr takes home $7500 more in take home pay and increased purchasing power..)

Are Republicans and Democrats really thinking about American Families when they discuss Social Security Reform and Tax Reform? Republicans in the House and Senate may need to reach a consensus before the President’s Tax panel reports in July. The election cycle will start up again very soon and the longer Republicans wait to act the less likely they will be able to accomplish major reform. There may be an answer for Republicans and Democrats waiting in the wings – The Fair Tax Legislative package-HR25/S25 – www.fairtax.org

Grover Norquist of Americans for Tax reform has been quoted as having the belief that Washington will only tinker with the current code and not make a major move. Congressman Bill Thomas has opened that door wide to consider major tax reform that handles the regressive payroll tax, long-term care for Seniors, retirement savings, Social Security and Medicare reform for the long haul and much more.

Republicans will certainly discuss the guidelines or markers that President Bush set down for his Tax Reform Panel and the concerns his Social Security Commission reported as well. Republicans are aware that major reform needs some bipartisan support as well. However, neither party is addressing reform that helps American Families and American workers. Neither party has addressed the most regressive tax on the working poor and Middle class. Democrats don’t believe there is a Social Security problem but they fail to see the regressive payroll tax draining the life out the workingman’s paycheck and suppressing wage growth in the American Economy.

Both parties may tinker with the edges of a bloated and over bearing tax code to give crumbs back to American Families, if and only if they file on April 15th correctly to get a tax return of their own money. In all most every tax return you are talking about getting back your own money! But to file your 1040 tax form by yourself you have to go through 104 pages of instructions. That’s not fair and that’s not right.

American Workers don’t want to wait for their tax return in the mail. They all just want a raise. Let them keep more of what they earn not by filing and asking permission to get it back from Uncle Sam but let them take home more pay each week to feed, clothe, house and save for their own families. That requires major Tax Simplification and reform and it is time for both Republicans and Democrats to show leadership and get it done.

The answer to true reform, fairness and simplification that meets the needs of American Families and meets the Presidential guidelines set out for the Tax reform panel is the Fair Tax Legislative Package –HR 25/S25 (www.fairtax.org). There is a ten-fold economic benefit to American Families, American workers and the American economy in the Fair Tax Legislative package. This is the Nonpartisan solution that they all seek.

The Fair Tax is true Tax Simplification that is Progressive and Revenue Neutral.

Congressional Bill - HR 25/S25 - commonly called the Fair Tax is a comprehensive package that eliminates all income, payroll and business taxes as well as the inheritance tax, AMT and Capital gains taxes. This will first cause prices to drop 22 to 25% before you add in the Federal Retail Sales Tax. Consumers will pay close to the same as they pay now but take home 100% of their paycheck free of federal income tax and free of Payroll taxes.

Some of the Ten-fold economic advantages include:

Exports are not taxed under the Fair Tax; Combined with the price drop of 22 to 25% this means a BOOM in manufacturing and production back in the US; Bringing back good paying jobs and fighting outsourcing. Economic growth in the first year is estimated at 10.5%. European countries are lowering their business taxes to match the great success that Ireland has experienced. Ireland has the lowest Corporate Tax rates of about 12%. Under the Fair Tax the business tax rate is lowered to 0% for exports. U.S. soil will become the number one place in the world for Corporate Headquarters and for manufacturing plants and service companies. Instead of the Bahamas being the tax free zone for business the entire United States will become a tax free zone for business. That translates to jobs and more jobs. That is what American Families want and what our quality American Workers need. This should be considered Pro-Union, Pro workingman Tax reform package.

HR 25/S25 also has a Prebate system, where every family of 4 will receive a $479 check monthly as a rebate on all Sales tax paid up to the poverty line of spending of $24,900. A couple would receive $357/m and an individual $178/m. This makes the Fair Tax progressive and fair. Net effective tax rate for the Poor at the poverty line is 0%, for the middle class at twice the poverty line is 11.5%; for 4 times poverty line 17.2% and the richer you are and the more you spend your net rate is between 20 and 23%

No other Legislative package replaces the payroll tax and the income tax with a broader tax base that is revenue neutral for the National Budget, Social Security and Medicare and on top of it gives every American Family a raise in take home pay.

With a broader tax base the Fair Tax lowers the effective tax rate for everyone. Giving an average American family of 4 making $50,000 over $7,500 more in take home pay and after tax purchasing power. That is money that can be saved for retirement; buy a Health Insurance policy; pay for long-term Care insurance; pay for College tuition or any other family priority. The choice belongs to the family not to a government tax credit to be applied for on April 15th. That is true “Ownership” for an Ownership society.

Senator Lindsey Graham of South Carolina has advocated raising the payroll tax’s taxing limit above the current $90,000 level. Under the Fair Tax you eliminate the payroll tax and give every American family a Raise. You also broaden the tax base for Social Security and Medicare when the wealthier among us spend more than $90,000 they are still supporting the Social Security and Medicare systems. Senator Graham does not have to stay with the out dated income and payroll tax system and fight the battle of raising the Social Security taxing limit up from $90,000 to $120,000 as he has proposed. It doesn’t matter if the wealthy inherit the money; earn it from investments or Capital gains, from offshore or onshore accounts because when they spend $120,000 or $1.2 million on new products or services, they will now be supporting Social Security and Medicare. As the economy grows you continue to strengthen Social Security and Medicare with this broader tax base.

Under the old tax code the wealthy in a 35% tax bracket would pay $1000 in mortgage interest and get $350 back on their taxes. The Middle class in a 15% tax bracket might pay $1,000 in mortgage interest and only get $150 back on their taxes. Under the Fair Tax you take home 100% of your paycheck with no income tax or payroll tax taken out. There is nothing to get a deduction from; you already got 100% back. This increases possibilities for home ownership for many lower income Americans because they will have more spendable income to afford a Mortgage and a home.

The Sales Tax portion of the Fair Tax does not apply to a used or previously built home. However, new homes under the Fair Tax will have major cost savings and will be 22 to 25% less to construct. Once you add on the Sales tax it will cost close to what it costs now. Therefore when the wealthy build a new Mini-mansion for $900,000, they will pay their fair share. This is where the Fair Tax answers Democrat’s concerns for taxing inherited wealth and providing for Tax Fairness and Progressivity. When the wealthy spend more they pay more. It’s fair and it’s simple. In addition, the Fair Tax could cause a boom to Housing because interest rates are estimated to drop 20 to 30%. This makes it easier to buy a home for everyone and reduce their current mortgage payments, if they refinance. The Fair Tax maintains the benefits for housing and home ownership that the President seeks from his tax reform panel by making it easier to save and pay for a home.

Charitable giving will not need to be a deduction for similar reasons. There is not an income tax to deduct from. You get all your money with no taxes taken out. When you give to church or to charity, you pay no Sales tax and you give for an honest reason not for a tax break on your income taxes. The United State is a generous nation, 70% of the population gives but does not itemize their charitable giving. Charities do better when economic conditions are growing. First year under the Fair Tax, the economy is estimated to grow 10.5% and if Tsunami relief donations are any indication, charitable giving will increase under the Fair Tax not decrease. In addition, your Church or charity no longer pays payroll taxes and has that money now available to help those in need or expand their programs.

The Fair Tax taxes consumption of the undocumented alien community who are often paid primarily in cash with no income taxes filed. When they go to Wal-Mart or Target they will pay their fair share of tax, thereby supporting the National budget, Social Security and Medicare. When tourists visit and spend money in the US they will also pay the tax. Because of the elimination of business and payroll taxes prices to consumers and tourists will be about the same as they are now. The States of Florida and Texas support their budgets on a sales tax and have no income tax. The US government can easily do the same.

State and local Governments will benefit from going to the Fair Tax system nationally. By eliminating the employer paid portion of the payroll taxes, there will be a major savings in municipal payrolls and in payrolls for local school districts. This savings will go a long way to helping those states and local governments with their own budget issues.

The Fair Tax Supporters are eager to share how their non-partisan package is revenue neutral for the US treasury and provides multiple solutions to the country's economic and tax concerns in one political package that both parties can support. Supporters believe it is "Family Friendly Tax Reform" whose time has come.

Visit the FAQ section of www.fairtax.org for further information.

Sign the on-line petition and let your Congressman and Senators know that you support the Fair Tax Package HR25/S25.