By Rep. Woodall
There are few things that can hang a dark cloud over a beautiful spring day in the middle of April, but Tax Day certainly makes the cut. It's a shame for many reasons, but perhaps none more than the fact that it simply doesn't have to be this way.
Now we all know the day itself isn't the real issue; it's just the culmination of a broken, punitive system we know as the income tax. The good news is, however, we have the ability to fix or -- as I prefer -- replace it. It's only a matter of will, and the American people are fed up with our broken system and demanding action.
So what's the alternative? How do we do better? Some have proposed plans to reduce the complexity of your tax return and shrink the reach of the IRS. But at a time when America is wasting millions of hours and billions of dollars on compliance, and the IRS is more dangerous than it has ever been, nibbling around the edges of a failed system is not the answer. My plan is the FairTax, which would eliminate your tax return entirely, put the IRS out of business for good, and mark the largest transfer of power from Washington back to the American people in our history.
The FairTax, or H.R. 25, is a bill I introduced in the U.S. House of Representatives that has far more support than any other major tax reform proposal in Congress. It would completely rip out our existing income tax structure and replace it with a national consumption tax on only new goods and services. Corporate, estate, and personal income taxes would all be gone. The payroll tax, which disproportionately hurts the most vulnerable families who are struggling to make ends meet, would disappear as well.
This means for the first time since World War II, you will be able to take home your entire paycheck. In place of these taxes, we would establish a 23 percent inclusive sales tax shown clearly on your receipt when purchasing new goods and services. Furthermore, because I believe that all taxes should be voluntary, the FairTax provides that every American can purchase essential goods and services tax free up to the national poverty level through a tool called the prebate. The prebate would be a check from the federal government at the beginning of each month sent to every household to cover the tax consequences present in the cost of basic living. The amount of the prebate would be based on the U.S. Health and Human Services report of the federal poverty level estimated at the beginning of each year.
Designed as a revenue-neutral alternative to the income tax, the FairTax levels the playing field by removing all the loopholes, exemptions, and difficulties that exist through the Internal Revenue Service now. It encourages productivity and restores taxpayer anonymity. For far too long we have endured a tax code that does just the opposite. In fact, the current system punishes hard-working Americans twice -- once when they earn a paycheck and again when corporations pass their tax-related costs onto those same consumers. American workers are paying a heavy price for a tax code that no one believes is working.
As for anonymity, anyone who has ever filed taxes, much less gone through an audit, knows all too well that the process requires the American taxpayer to provide the federal government with more information than most would want to share with their children. This isn't necessary, it isn't productive, and it isn't consistent with the American principles of freedom and opportunity.
The FairTax embraces these principles rather than undermines them. It doesn't pick winners and losers or try to manipulate behavior from Washington, D.C. It does, however, reinvigorate the American ideal that by the power of your ideas and sweat of your brow one can make tomorrow better than today. Washington simply needs to get out of the way.
Legislation doesn't create jobs or economic growth; the American people do. The FairTax understands this, and is counting on it. According to the Small Business Administration, small businesses of 20 or fewer people account for approximately 90 percent of all U.S. employers, and employ 20 million people across the country. That being said, it is also estimated that they spend an average of $74 an hour on federal tax code compliance. Clearly that is time and money they are unable to invest in growing their business and hiring our neighbors.
Our tax policy should reflect our economic ambitions, not be a millstone around the neck of the American economy. Our tax code can and should leverage our entrepreneurial spirit and reward our hard work. With Tax Day upon us, millions of Americans are again sorting through the myriad complexities and consequences of IRS regulations, but thankfully we have a clear alternative -- the FairTax. Let's make April 15 just another beautiful spring day.
Rob Woodall, R-Ga., represents the 7th Congressional District of Georgia, which includes the majority of Gwinnett and Forsyth counties, and currently serves as Chairman of the Rules Subcommittee on Legislative and Budget Process, as well as serving on the Transportation & Infrastructure Committee and Budget Committee.