Tuesday, November 16, 2010

Chuck Norris Touts FairTax in Interview

Below is an interview with Chuck Norris. He touts the FairTax in Part 2 and Part 3.

Videos from the Kansas Prosperity Summit 2011

Below are videos from the Kansas Prosperity Summit 2011.

Friday, November 12, 2010

Kansas Prosperity Summit 2011

I went to The Kansas Prosperity Summit 2011 in Topeka, KS today. Organized by FairTaxKC, the event began in the morning with the attendance of the final session of the Joint Interim Tax Committee hearing at the Kansas State Capitol. Before recessing for lunch, Chairman Richard Carlson requested to take a vote to conduct a study to compare Kansas’s tax structure with the structure of those states that do not have a state income tax system. The committee voted in favor of the study.

The main event began at noon at the Topeka Performing Arts Center (TPAC). Emceed by Earl Long, the speakers included Kansas Secretary of State-Elect Kris Kobach, American Legislative Exchange Council Tax and Fiscal Policy Director Jonathan Williams, Kansas Policy Institute Dave Trabert, and Kansas House of Representatives Speaker Pro Tem Arlen Siegfreid. The event focused on pushing the Kansas legislature to adopt the FairTax, a consumption based tax on the sale of new goods or services, as a state tax and eliminate the state income tax.

Secretary-elect Kris Kobach, a constitutional law professor at University of Missouri-Kansas City who helped develop Arizona’s controversial statute requiring aliens to keep documentation in possession, said that the U.S. income tax code created a way for the federal government to regulate activities that it could not otherwise under the 10th Amendment. Mr. Kobach also spoke about how illegal immigrants can’t evade the FairTax like the income tax. He said that, while some illegal immigrants pays income taxes, most illegal immigrants do not, mainly because they get paid in cash. Mr. Kobach said that illegal immigrants cannot evade the FairTax because they must pay the tax on any taxable purchases at the time of sale to the retailer.

Jonathan Williams coauthored Rich States, Poor States, a book that ranks states’ economic performance. Mr. Williams said that the states that rank best do not have a state income tax. The states that rank the worst have high taxes. Kansas ranked 40th in his book. Mr. Williams said that Kansas could improve its ranking by adopting the FairTax. Mr. Williams referred to states as a “laboratory for democracy” and closed his speech with saying “Let’s make Kansas a laboratory for democracy and let’s make Kansas a laboratory for prosperity.”

Dave Trabert said that eliminating the state’s income tax is the key to creating a pro-growth tax plan. Mr. Trabert said that the loss of revenue should be backfilled by eliminating most tax credits and reducing spending.

Speaker Pro Tem Arlen Siegfreid said Kansas needs to spur business growth and business formation. As a result, Speaker Siegfreid said that he intends to introduce the FairTax in the next legislative session. Speaker Siegfreid said that the executive branch currently entices companies to locate to Kansas by providing various tax breaks and that is an indicator that Kansas’s current tax system is not good enough to attract such businesses without additional tax breaks.

The event ended with a question and answer session with a panel of experts on the FairTax. The first few questions dealt with the prebate. The prebate is a monthly check sent to all households as an advanced reimbursement for the amount of FairTax paid on purchases up to the households’ proverty levels. In answering a different question, a panel emphasized that FairTax supporters must educate their circle of influence about the FairTax.

I have posted photos of the event on the FairTax Push Facebook fan page.

Thursday, November 11, 2010

Another Article About Repatriating Profits and Why It's Won't Happen with the Current Tax System

I just found an article posted on WSJ.com on October 20, 2010 that concurs what I posted on October 12, 2010 regarding

On October 12, 2010, I posted an article on repatriated profits (or lack thereof) on how billions of dollars of U.S. companies’ profits generated overseas are not brought back to the U.S. due to corporate income tax implications. Since then, an article was posted on WSJ.com that says that up to a trillion dollars are “waiting to be repatriated if tax policy is right.” The hurdle though is the federal tax rate up to 35%.

The article was authored by Cisco Chairman and CEO John Chambers and Oracle President Safra Catz. Why would these two business leaders take the time to write an article about repatriated profits? Probably, it is because their companies are both among those that want to repatriate overseas profits.

The article suggests a tax rate of 5% on repatriated profits; however, that rate might still be a hinderance because repatriated profits may still also be subject to state income taxes. What if the U.S. adopted the FairTax? The FairTax would not impose any tax on repatriated profits, which would mean that such profits would only be subject to state income taxes. That would make repatriating profits more enticing. Furthermore, if states also adopt the FairTax, then repatriated profits may not be subject to any taxes. That would really make repatriating profits enticing.

Chambers and Catz wrote that repatriating cash could create a stimulus package larger than the entire federal stimulus package, and none of the funds would be public/taxpayer money. The stimulus could be used to investing in research, building plants, purchasing equipment, and more. All of these uses create jobs.

It sure would be nice to bring that money to the U.S. As long as the 35 percent tax rate looms, though, that money will continue to benefit the economy in other countries.


Thursday, October 21, 2010

Misleading Attack Ads Against Fair Tax Supporters

Apparently, opponents of political candidates who support the Fair Tax are running misleading ads that say the Fair Tax supporter wants to raise taxes by imposing a 23% national sales tax. What these ads don’t say is that the sales tax would replace the income tax.


Tuesday, October 12, 2010

Repatriated profits can help economy but won't happen under current tax rates

Why is Microsoft issuing bonds to raise up to $6 billion when it already has a lot more than that in cash? To pay dividends to its shareholders. Huh?

Why can’t Microsoft pay dividends from its existing cash accounts? Because most of Microsoft’s cash is held overseas and derived from overseas profits. So?

Why don’t Microsoft transfer it to its U.S. bank accounts? Taxes! Oh.

That’s right! Microsoft would have to pay corporate taxes if Microsoft moves money from its overseas operations to the United States, even if Microsoft already paid taxes to the other countries. That means billions are sitting overseas helping the economies of other nations.

Moving overseas profits state side is called “repatriation”. In an economic assessment prepared by Dr. George Schink and Dr. Laura Tyson, taxes on repatriated profits are keeping an estimated $565 billion from coming to the U.S. from other nations. That’s almost as much as the $700 billion stimulus/bailout plan passed by congress and signed by President Obama in 2008

The FairTax does not tax repatriated profits. That means the U.S. could get a $565 billion stimulus by enacting the FairTax. Let’s make it happen.

Sunday, July 11, 2010

Saturday, July 10, 2010

FairTax can be better for the environment than the current income tax system

One of the many positives of the FairTax is that it helps the environment. Since the FairTax exempt purchases on used products, consumers have a bigger incentive to purchase used products to satisfy their wants and needs. Not only are used products priced lower than new products, the tax savings can also be significant when shopping for cars, appliances, recreation vehicles, exercise equipment, and many other costly goods.

FairTax can also reduce the demand for paper. According to one of the FairTax white paper, “What the federal tax system is costing you – besides taxes!”, over 130 million individual tax returns were filed and approximately 50 million business tax returns (includes corporations, partnerships, and sole proprieters) were filed. Under the FairTax, no individual tax returns would be filed other than a form to apply for prebates. Think about how much paper that saves (tax forms, instruction booklets). IRS still sends millions of tax booklets to households every year.

Businesses would no longer have to file complex income tax returns, saving any more paper. Since only businesses that sell goods or service at the retail level would have to file a sales tax return, more paper is saved. More paper saved means more trees and more room at the landfill.

Fuel would also be subject to the FairTax on top of the existing fuel taxes. I like to travel and would continue to do so under the FairTax; however, I will cut down on unnecessary trips. If the FairTax reduces demand for fuel, fuel prices would drop and the air would be cleaner.

Overall, the FairTax could have a significant drop in demand for natural resources. Environmental groups should be clamoring for the FairTax.

Thursday, July 8, 2010

IMF tells US to reduce budget deficit, suggests consumption tax to do it

In a Wall Street Journal article, the IMF is telling the United States to reduce its budget deficit. They recommended cutting entitlements such as social security, reducing the mortgage interest deduction, increase energy taxes, or implement a national consumption tax. The FairTax is a national consumption tax that would tax energy use and reduce the mortgage interest deduction by repealing the federal income tax code. Let’s make it happen.

Tuesday, July 6, 2010

My Attempt to Alleviate Concerns About the FairTax

Understandably, some people have concerns regarding the FairTax proposal. Here is my attempt to alleviate some of them:

Low income and middle class households will have to pay more under the FairTax than the income tax. That could be true if they spend all of their income on taxable goods. Since most of these households would be spending some of their income on house payments of older homes and used vehicles, both of which would be FairTax exempt purchases, their tax burden would be less. Also, the prebate offsets FairTaxes paid on purchases up to the poverty level.

Big corporations get all the breaks, while the U.S. consumer gets the shaft. Currently, big corporations already get tax breaks that small businesses could not take advantage of. Under the FairTax proposal, big and small companies alike would be exempt from paying the FairTax on purchases for business purchases. The tax savings would allow companies to price their products more competitively (giving the American consumer more purchasing power) or expand their business (creating more jobs).

The 23 percent tax rate would not be enough to replace income tax revenues. Granted, the top income tax rate for top earners is 35 percent, but that rate only applies to part of their income. Taxpayers in that tax bracket have found ways to shelter and/or hide income to avoid paying income taxes. The FairTax makes it hard for anyone to avoid paying taxes.

Americans will create sham businesses to make tax free purchases. Businesses would be exempt from paying the FairTax only on purchases for business purposes. Businesses would still be subject to audits, back taxes, and penalties, which would be the deterrent to invoking the exemption for personal use. Since citizens themselves would no longer be subject to audits, more focus would be on businesses to be compliant. Nevertheless, to those who do start a business for the purpose of avoiding the FairTax and can justify the business use of tax exempt purchases, more power to them! Businesses, after all, make huge contributions to the economy, and the FairTax helps businesses contribute their part.

Manufacturing and Retail Industries will suffer. Every time that I’m shopping for groceries or looking at steak prices on a menu, I never think about how much extra I’m paying for sales tax. When I’m shopping for a vehicle, though, I will take sales tax into consideration. If/when the FairTax passes and goes into effect, I’m sure shoppers will take the FairTax rate into consideration, especially the larger purchases. They, however, would have more purchasing power due to federal income taxes and FICA no longer taken out of their paychecks. There may be a noticeable shift in buying habits but not drastic.