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Is it possible to have a simple and fair solution to the US tax code? Yes, it’s called the FairTax.
105 years ago the 16th Amendment was passed allowing the US Government to levy an income tax on corporations. Somewhere along the way things changed and we find ourselves buried under 74,000 pages of tax code.
Which is simpler: 74,000 pages or 133?
The FairTax turns our complicated system into a medium sized book. The FairTax is much simpler:
- No more income tax withholding
- No more filing taxes on April 15th
- No more missed deductions
- No more taxes on interest earned or capital gains
- No more unfair tax breaks
- No more unreported revenues
- No more IRS audits
What the FairTax does is:
- Allows us to bring our entire paycheck home (minus voluntary retirement savings, health insurance, etc)
- Sends every person with a US address and Social Security number, regardless of citizenship, money to cover the sales tax paid on the necessities of life (food, shelter, clothing, energy, etc)
- Reduces the price of goods and services we buy
- Taxes EVERYBODY, even visitors to our country (legally or illegally)
- Taxes us only on new products and services we buy
- Funds Government programs, including THE MILITARY, Social Security and Medicare
- Makes US products more competitive in the global market
- Will increase demand for goods and services, thus creating more jobs
- Becomes more progressive as people who earn more, spend more
Listen to the interview with FairTax Larry for a better explanation of how the FairTax works
Educate yourself on tax plans and the FairTax
Here is a list of articles and resources mentioned in the show:
Prebate rates
FairTax Larry’s email address
Article on How To Judge a Tax Plan
FairTax:The Truth CD: Answering the Critics
Also in this episode:
Holla from the Impala: I met a Financial Advisor who doesn’t know what debt is.
Question from Prudence Debtfree: Do people using Debit spend more than those using Credit? Cash?
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Have a question about Debt or living below your means?
[contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Question or comment’ type=’textarea’ required=’1’/][/contact-form]
Steve, I really appreciate you taking on that other financial writer who doesn’t like debt but insists on using credit cards in your Holla’ From the Impala. What you said got me to thinking. We often do slip into using debt products without even thinking. For instance, when I got my new cell phone, I decided to go with the T-Mobile no contract plan. I picked out the cheapest smart phone that would meet my needs and went to the store to buy it. I tried paying for it and the clerk told me I should just take the phone and T-Mobile would bill me another $15 for 12 months. I would pay the same price and not have to plunk down $180 at one time. I said thanks but no thanks as I did not want to be in debt to T-Mobile. People should recognize that any cell phone deal where they go under contract to buy a phone or service is a debt product.
But then my thinking carried me further. There’s really two ways to pay for things. We either pay up front or we pay when we have received service. When I go to the movies, I pay up front. But there are many times I do not pay for an item until I have received satisfactory product/service. I’d like to hear your comments on these examples:
1) When I go to IHOP for my breakfast, I do not insist on the check when the omelet is delivered so I can run up and pay the cashier before I eat. Instead I eat, then leisurely drink my coffee. I remain in debt to the restaurant for about an hour but I feel this is reasonable because I want to make sure I get the full value of the experience before I pay.
2) My electric bill comes monthly and I pay the bill when it arrives. This puts me in debt to the electric company for up to a month of usage. I feel this is also reasonable because I use electricity daily and could not pay with each use, and I really don’t know how much the bill will be until they read the meter and send me an invoice. (and no I do not have a deposit with the electric company.)
3) In the summer, my lawn is cut every two weeks. The gardener emails me a bill at the end of each month. Sometimes it is cut twice in the month and sometimes three times. I know that I am in debt to him for the month and until I get around to sending him the check, but I believe this a reasonable use of debt because I want to make sure I get good service for the full month before I pay.
4) When I order my ‘Just-For-Men’ hair color from http://www.stackingbenjamins.com/amazon (Sorry I had to get a plug in for Average Joe and O.G.), I pay with credit card. I do this for the same reason as the other three examples of debt. I want to make sure that my product arrives as promised before any money comes out of my pocket.
I feel all four of these are examples of proper use of debt. I believe it is perfectly reasonable in many everyday transactions, to wait for the service or product even recognizing that this is technically debt. What sayest you?
You bring up some excellent examples SecondTimothy. For years I have tried to verbalize what you just said but can’t find a way to explain it in an easy-to-understand way.
In one way you can say that you have entered into an agreement to pay for products or services within a reasonable amount of time. IHOP expects to be paid the same day but businesses have 60-90 day terms. Is that debt? Some would agree that it is and that it agrees with the Webster’s definition (which can still be purchased in hardcopy using http://StackingBenjamins.com/Amazon).
However, I don’t consider it debt because you will never see it on a credit report – unless you don’t pay it in the agreed amount of time. My electric bill will never be on my credit report unless I don’t pay it. 20+ years of paying for cable has never helped nor improved my credit score because it is not debt unless I don’t pay it. My cell phone payment doesn’t effect my credit score or credit report – even though they want to pull my credit before letting me sign up for their service (that’s a bit one-sided, isn’t it?).
I consider credit cards debt because you have not entered into an agreement with the store or service provider to pay, you have entered into a 3rd party agreement with a bank on the east coast to buy their money and use it instead – even if it is for 30 days.
You keep bringing up good stuff. We need to get together for coffee sometime to hash some of this out.
Rest assured, SecondTimothy’s commission check is in the mail….. 😉
Steve, Thanks for giving me an answer in your very respectful way. Your attitude towards your guests on the interviews (even those who are diametrically opposed to your ideas) is of the reasons I respect your views and really like your Podcast. You do bring up some good points and I admit it was a less-than-subtle jab for me to include the credit card example in my post, knowing your position on credit cards. Nevertheless there is one point in your post that needs to be refuted. You say your utility bill will never be on your credit report. Yet in your great interview with Anthony Sprauve of FICO (MoneyPlanSOS.com/168) which I recommend for anyone who has not heard it, It was stated that FICO continues to revise its scoring model and it was explicitly in FICO’s long term plan to include such payments as rent and utilities. So your distinction of equating debt with the credit score may lose some of its power in the future.
On a related note, I strongly disagree that using a cell phone with a contract is anything but debt. Anyone who believes they are buying the latest smart phone for $99.00 when they walk out of the cell phone store with their new two year contract in hand, is greatly deceiving themselves. Your readers who oppose debt should be made aware that it is possible to buy a phone outright and enter into a pre-paid plan with one of many different cell phone companies. This is exactly what I did with T-Mobile in the above post and I did NOT give them permission to pull my credit and they did NOT pull my credit.
Finally, I would love the opportunity to sit down with you over coffee for a couple hours so we could hash out everything from credit cards to how we integrate our Christian beliefs into our views on finances (or should that be the other way around?). What a cool thought and I confess more invigorating than discussing the merits of the Fair Tax. Certainly, you have an open invitation any time you plan to pass through Alabama to contact me so we can arrange to spend some time together.
Yes, Anthony Sprauve did say they are looking for ways to incorporate non-debt items into their evaluation. When that day comes I will revise my statement and find new ways to bash the credit score industry 🙂
About cell phone plans: I have learned a lot from Rey Brown from SmartPhones Made Easy. I can’t remember if we tackled the subject of paying for phones through the contract when I interviewed him (Ep163) but there are a number of plans the carriers are offering that do make it sound like debt.
The mobile phone industry is getting more complicated and I feel more confident from his show that I’ll be making an informed decision, at least a better decision, knowing what I do now. Rey has been a big help.
Alabama. Sure. That’s really close to STL, but I’ll try.
Sign me up for the FairTax 🙂