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Sunday, June 17, 2012

How does FairTax become Law?




Like many kids from the 60's, I smoked cigarettes because that was the way to show your defiant and rebellious individualism. Young people have a difficult time finding who they are and where they fit in among their peers in society. Smoking was cool, a step toward being an adult, or so we were led to believe by media advertising (curse the Marlboro Man & Joe Camel). I tried to quit several times but never had the personal commitment to divorce myself from the habit. Then on February 3rd, 2002 I quit cold turkey, threw a half a pack in the trash and haven't had one since. No gum, no patch, no hypnosis, no help from my wife or friends. How did I do it? I had no choice. That morning I awoke in a hotel room with the same deep smoker's cough I've been tolerating for many years, but this time I couldn't stop coughing and I couldn't breath. A frightening experience that made me change my life. Sometimes a hard slap in the face is needed to get a person's attention. Perhaps the same for our nation?

Our country is about to have a frightening financial experience that will change most of our lives for the worse if we don't do something about it soon, very soon. If we wait until its a crisis, I fear a hasty and wrong decision.  FairTax Dave


So, what can you do to help FairTax become reality and ultimately save our country?
1- Spend a little time with the Constitution. It's the most marvelous document ever written about the governing of a nation and it's people. Help your kids understand it's importance.
2- Visit the FairTax website and read (or watch) the 50 FAQs. Then explore the many investigative reports, white papers and important information contained within.
Send this website to your friends on Facebook
3- READ the BILL. We already talked about this. Go ahead, you can do it.  Dare to be smarter than those elected to represent you in Washington.
4- Pick up "The FairTax Book" and read it. You may also want to read "FairTax: The Truth" and other publications. Warning; there are some books out there that tell lies about FairTax. It's OK to read them to learn their spin, but you may want to be grounded in the truth first.
5- Now that you have studied FairTax it's time to get in the game. Talk with your family and friends, share FairTax with your social groups, get involved, teach what you have learned to those important to you.
6- Contact your Congressman and Senators by mail, e-mail, phone call, in person at a Town Hall meeting or in their office. Let him/her know you support FairTax and ask them to do the same. Always be polite, but never compromise your beliefs. Besides, you may find out you know more about FairTax then they do. (If so, recommend to them).
7- Join the revolution. Go to to find a FairTax group near you. If you can't find one, start one of your own. FairTax Nation will be thrilled to help you get started.
8- Send a message to your friends on Facebook and Twitter to visit and  Spread the word. FairTax is the right way to get our country back.

Even if all you do is talk with your neighbor, or put a FairTax bumper sticker on your car, or wear a FairTax hat or tee shirt to the Mall, or put a FairTax sign in the window of your business, or make a donation to FairTax; you will be supporting a worthy cause that will benefit the future of all Americans, including your kids and their kids... and their kids.

"Nobody made a greater mistake than he who did nothing because he could only do a little."   Edmund Burke

OK, so you like the promise that FairTax offers to you, your family and your friends, your employer or your employees, your community and your country. But you still have doubts FairTax will ever become law; and if it did, will FairTax really work? Knowing what we've learned so far and making some realistic assumptions, let's explore what might happen.

Demand an open debate and floor vote on the FairTax
The most common reply I receive after presenting FairTax to a group of interested and concerned citizens is, "FairTax looks great, but Washington will never let it happen." That was my initial reaction, too. But then I looked at the numbers. What is required to make FairTax the law of the land are the yea votes of 218 Congressman and 51 Senators (no super majority needed), plus a President's signature. Sounds easy, but we know the difficulty in getting Washington to act, it's like herding cats. Face the facts; many of our politicians don't have the courage to do the right thing; they prefer compromise over principle. Indiana just fired an over-compromising six-term Senator in a recent primary proving once again; the people have the power to replace those who do not represent their wishes.

"All compromise is based on give and take, but there can be no give and take on fundamentals. Any compromise on mere fundamentals is surrender. For it is all give and no take."   Mahatma Gandhi

Currently there are 68 Representatives and 9 Senators that outwardly support the FairTax by co-sponsoring Bill HR-25 and Bill S-13. (You can find their names at A similar number in both houses oppose the FairTax. You can probably guess who the opposers are; the usual suspects that put politics before people, personal enrichment before sworn duty... and resort to Class Warfare, the Race Card, lies and deception instead of facts to advance their arguments. But the majority of our lawmakers are sitting on the fence not wanting to take a position. "We the People" must force the issue by putting their re-election prospects in jeopardy if they refuse to act favorably to the peoples interests.

"A people that values its privileges above its principles soon loses both."  President Dwight D. Eisenhower

FairTax does not support any politician or political party, however, FairTax is the ultimate litmus test when it comes to exposing a politician's true core principles.  How can anyone in Congress not support the principles on which FairTax was built? Unfortunately, those who stand to benefit the most from FairTax (the poor, the elderly, and the young liberals) are the same who continually vote the opponents of FairTax into office. Yes, I'm talking about those who blindly vote for Democrats. If they would pressure their elected officials to support the FairTax (or replace them with someone who will) it would make it easier to pass into law. If not, we will need a whole lot of conservatives in Congress. Elections do have consequences.

Transitioning America to the FairTax

Many think changing from an income tax system to a consumption tax system would be complicated and require several stages to phase in. The by-product of such thinking would add a new tax revenue stream (consumption) while never removing the old one (income). This is the problem with Herman Cain's "9-9-9" plan; it assumes after a year or two of 9% Corporate tax, 9% income tax, and 9% consumption tax, Americans would be ready to switch over to the FairTax. (Notice, two-thirds of the 9-9-9 tax will be embedded in the prices you pay for goods and services, which means you pay 9% sales tax on that embedded tax). If history is any indication, 9-9-9 will grow to 20-20-20 before the income tax would ever get repealed, and FairTax would never become law, and the IRS would never be terminated. The only major federal tax ever repealed was the income tax to fund the Civil War, and the main reason Congress was forced in 1872 to repeal it was because it was called "The Civil War Tax". Americans are not stupid. To promote an interim plan while the citizens get "comfortable" with the FairTax is an insult to all of us. Its not that difficult to understand. Folks, we don't need a bridge, we need the FairTax. 

"America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves."
President Abraham Lincoln

FairTax is so simple even a 7th grade student can figure it out, and so is the transition which should not be difficult or take more than six months to complete. The following is my scenario of how FairTax could be quickly transitioned into law after open debate in both houses of Congress under the watchful eye of C-Span and the American public. It is important to note; FairTax supporters will not tolerate any revisions or earmarks to the FairTax Bill. FairTax is the most examined, studied, analyzed and scrutinized piece of legislation in our nation's history. It's been in Washington since 1999. It needs no creative distortions from Congress. We should and must insist on a full and open debate in both Houses of Congress on the merits of Bill HR-25 / S-13 as written without amendment or additions. If it passes we get our country back, if it doesn't pass we will know who to vote out of Congress in the next election.

"There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right."  President Ronald Reagan

Winter/Spring of 20?? - FairTax Bill HR-25 is passed in the House by more than 217 votes and Bill S-13 is passed in the Senate by more than 50 votes, as written without amendment or additions. The President signs FairTax into law the following week with much fanfare and urgency because the public demanded it and the national debt is much worse than it is now.

However, before FairTax can be enacted into law there are several organizational and logistical changes that must be accomplished before December 31st. Among them are:

1- Verification of Social Security numbers and the registration of persons and families in America who qualify for the prebate.
2- Educate the State Sales Tax Administrators on the rules of collecting the FairTaxas well as all public and private sector services/businesses. Also, inform the American public of the details in the pending transition. An informed public is vital.
3- Reprogramming of retailer's Cash Registers to record the national sales tax on a printed receipt will be easy.
4- Restructure the U.S. Treasury to begin the phasing-out of the Internal Revenue Service as well as the creation and staffing of the Excise Tax Bureau and the (National) Sale Tax Bureau.
5- Establish the U.S. Treasury and State Cooperative Administration for the purpose of coordinating tax collection at the State level.
6- Amend all existing Treaties, Tariffs and Trade Agreements with other countries as required to comply with the FairTax.

"The income tax created more criminals than any other single act of government"  Senator Barry Goldwater

In the last quarter of the year some strange events could occur caused by uncertainty; such as families hoarding in fear of a major price increase, and businesses reducing their inventory to reduce their tax liability. Hoarding would cause an increase in products sold at the same time businesses are trying to reduce their inventory levels. Although great for certain Retailers, this could cause a shortage of some products resulting in a panic run on some stores and temporary price increases. The opposite could also happen; families postpone purchases and save all they can in hopes prices would be better under FairTax, or in preparation in the event prices go up. If this happens some businesses could end the year with unexpected taxable inventory. Then again many families will go on about their business looking forward to having more of their earned money (100% of their paycheck plus their prebate) without concern about any perceived or imagined consequences of transition.

Most likely there will be a mix of these three attitudes, to what degree depends on how well the government and the Media educates (or misleads) the American citizen. Furthermore, include the year-end holidays and Christmas shopping, and it becomes any one's guess how Americans will react. But no matter what happens it will be a minor short term up or down blip in our economy. If America reacts by spending (hoarding), it will be a great 4th quarter boon for the economy. If America reacts by saving (conserving), it will be a boon in the upcoming 1st quarter. Either way, our businesses, our government and our citizens win.

"This country will not be a good place for any of us to live in, unless we make it a good place for all of us to live in"   President Theodore Roosevelt

January 1st at 12:00:01 FairTax becomes law and all forms of federal income tax vanish.
January begins with the first prebate payment appearing in your bank account or on your Debt/Smart Card or in your mail box between the 1st and the 5th of the month. Your first paycheck has no income tax or payroll taxes withdrawn, meaning you have more cash in your hands. And so does your next paycheck, and the next. Prices at the store haven't changed because Retailers are using their inventory credits. Major Retailers such as Wal-Mart, Starbucks, Best Buy, McDonalds, Sears, Purdential, Krogers, Mobil, as well as all banks, utilities and municipalities will be ready for the transition on day one. (over 75% of retail sales in America are through major Retailers). You will actually have a lot more money left over at the end of January which you will probably put in your savings account, or use to get current with your creditors. 

February, March, April, May are the same as January, except some prices could rise due to the mix of products with and without embedded taxes passing through the supply pipeline. Thankfully you have your prebate plus extra money in your check to cover any price increases.  This predictable rise and fall in the prices (think of it as a pig in a python) is expected to be flushed out within the first 6 to 9 months depending on product shelf life, then competition should drive the prices back down to normal. April 15th will be an exciting day for Americans because it will be the last time they ever file an Income Tax Return. (Wouldn't surprise me if they made it a national holiday.) The hundreds of extra dollars you saved each month are building up, just looking for a beautiful day and a good reason to spend some of it.

"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed up resources could be used for more productive purposes."   Alan Greenspan

June, July & August is more of the same; more money, less stress, plus more Help Wanted Ads posted in the newspaper than Auctions and Foreclosures. Prices are returning to their previous levels. Americans are starting to make expenditures to repair or remodel their homes, replacing their old appliances, upgrading their vehicles, taking a nice vacation, enlarging their charitable contributions, paying down some bills and improving their lives. In doing so they stimulate the economy by spending and investing their money in their chosen pursuits of happiness.

September, October, & November experiences a sharp increase in construction as new manufacturing and distribution companies locate (or relocate) in America to take advantage of the 0% Corporate Tax rate. Empty structures and office spaces are being sold or rented, new small businesses are popping up everywhere. Also, home starts are up with more people qualifying for a new home purchase. Free enterprise is alive and growing in America... again.

"Capitalism is our only moral system. All other systems take advantage of man's rights and liberties."  Ayn Rand

December 31st marks the end of the first year under FairTax. A measurable amount of the $12 to $14 trillion of off-shore tax sheltered funds have returned to the United States in the form of business investments. Exports have grown at a healthy rate; the world is taking advantage of the 15% to 19% reduction in the price of American made goods. There are more jobs and more confidence in the American economy. Unemployment is dropping significantly and GDP is exceeding expectations. Christmas in America will be the best it has been in years... and the next year will be even better.

You ain't seen nothin yet ! GDP is predicted to be 7% to 10% each year for the next decade as more and more manufacturers set-up-shop in America and more American products reach foreign markets. FairTax is the answer to competing globally and paying off our enormous debt. More Americans will have an honest chance to earn a decent wage and live a rewarding life. Just as important, America will once again be the economic leader of the world.

"We have it in our power to begin the world over again."  Thomas Paine

Admittedly, I have painted a rosie picture that is over-simplified, but who's to say I'm wrong? I have yet to see any credible evidence that would indicate anything less than solid sustained economic growth. Alan Greenspan warned in 2005 of potential difficulties switching from a complicated income tax to a simple consumption tax, but he didn't say it was impossible. In fact, when asked how many years would it take for the off-shore tax sheltered money to find its way back to the USA, Greenspan replied, "I don't know, but it would be measured in months not years." Each industry should be able to prepare for and adjust to the FairTax rather quickly. Even those in the tax industry will find other businesses that need their skills. FairTax does much more than simplify taxes, maximize prosperity, and level the playing field. It transfers the power to control from Washington back to the States, and to "We the People".

Of great concern about a rapid transition is the fear of change causing panic on Main Street and Wall Street. An informed citizenry with more of their own money in hand will not panic, they will spend. Which may lead to another concern... inflation; too much money chasing too few goods. Yet another fear is the cost of energy escalating due to increased consumption resulting from more prosperity and manufacturing in the USA. (America will not reach it's full potential if we don't have a vibrant energy independence policy, regardless of the tax code). Also, EPA regulations and other government restrictions on growth must be eliminated or relaxed. Fear is no reason not to do the right thing. Look, as I told you before, if a dummy like me can figure this out, so can the people you hang around with or the ones we send to Washington, they just need to study the FairTaxAfter all, this is America! We can do this.

Thanks for visiting my website. Enjoy your summer.   FairTax Dave