Congressman John Linder’s recent announcement that he plans to retire after this term brought out a series of comments about his pet project, the so called Fair Tax. During my time as editor and publisher of the Journal, Madison County was in his district. On several occasions, he visited the Journal office in Danielsville and engaged us in conversations about his opinions and ideas. Even then, he was interested in the fair tax proposal.

The Fair Tax would have eliminated all payroll, capital gains and estate taxes in favor of a national sales tax. It would also have eliminated, or greatly reduced, the Internal Revenue Service. While the tax would have caused a considerable increase in the price of goods, it would have also increased the take home pay of workers and simplified life for buyers and sellers throughout the nation.

One of the complaints about the plan is that the tax would have to be very high to cover the cost of government, and that is correct. Another argument was that the tax would be figured into the price of goods, and people would not know how much tax they were paying. Nothing on their payroll slip would reveal the tax burden to them, and that is also correct.

But there are some clear advantages to the idea. For example, if you purchase American made goods, a major part of the price is created by payroll taxes on each person involved from the miners who dug the ore, to the foundry workers, to the factories that made the stuff, to the truck drivers who delivered it and finally the clerks who sold it to you. Whereas, imported goods only paid taxes for the last two people. Imported goods pay far fewer taxes than do domestic ones.

The Fair Tax would collect an equal amount of taxes on all goods, domestic or imported. That would reduce the advantage of imports and give American Made goods an even break. By keeping more manufacturing jobs in America, our unemployment figures would improve dramatically. People would have more money to spend generating revenue to support the government. Fewer people would be on welfare reducing the cost of government.

By cutting out the amount of record keeping, more people would be able to open and operate family businesses. Couple that with a dramatic reduction in rules and regulations and we could dramatically reduce the impact of government on them and giving them more control over their own lives.

To me, the Fair Tax idea has merit and ought to be given full consideration. It may be a good idea, or it may not work. But until Congress gives it a fair hearing, we will never know.

Copyright © 2010 by Frank Gillispie
frank@frankgillispie.com, Hull, GA