Until the Mexico Olympics of 1968, high jumpers faced the bar, and the record stood at 5′ 8″. Dick Fosbury turned his back on it and leapt 7′ 4″, by thinking the opposite of everyone else. He literally ‘turned his back’ and instead of jumping over the bar facing forwards, like every other jumper in track and field history, he jumped over it backwards and shattered records making heads spin in the process.
Today, US taxpayers face the IRS daily in the form of tax on production. Personal and corporate income tax, inheritance and payroll tax: a few of the largest taxes which have plagued citizens of this country since the ratification of the 16th Amendment in 1913. What if there was a simple, fair and transparent solution which could replace the current tax structure?
There is. It’s called the FairTax.
The FairTax taxes consumers instead of producers and puts taxes on sales versus on income/estate/payroll. Under the FairTax, retail businesses collect and remit, rather than individuals and corporations withholding and filing. The fundamentals of the FairTax are a 23% national sales tax on new goods and services. A prebate every US citizen receives, each month, to cover the tax on necessities (roughly $220/person) and it is not a flat tax or VAT tax. It is important to note the last part about what the FairTax is not, because the idea of a flat tax or consumption tax (sales tax) has been around for a few decades. These taxes are convoluted and confusing; the final sales price is not clear cut between product and tax and still requires filings by the taxpayer. This bipartisan alternative is simple, fair and transparent. The tax you pay at the register is right there at the bottom of your receipt. The burden of complying with the tax code and filing a tax return is no longer on 300 million Americans but now on 10 million retailers to collect at the register and remit.
You may wonder, how can a CPA like me be in favor of such “think opposite” legislation like the FairTax? The answer is easy, and one that so many CPA’s have given when placing their support behind the FairTax: There are much better and more profitable things I can be doing for my clients than their taxes.
How are you handling your money? The partners and staff at WithumSmith+Brown, PC are experienced in financial planning and wealth building. For questions on your money, contact your WS+B partner, today.
Arthur J. DaPonte, CPA, CGMA, Supervisor