John Linder in The FairTax Book

On Budget & Economy: Economic freedom is a component of political freedom

With the FairTax in place, to compete with American in the global market, other countries will have to recognize that the best way to economic prosperity is to allow people to be free in their economic endeavors--to make whatever voluntary arrangements they choose, with WHOMEVER they choose, WHENEVER they choose, without constraint from unfair tax consequences. That has huge implications for the world economy, and for the cause of freedom.

As other nations turn their constituents into "voluntary" taxpayers by copying us, they will also eliminate the coercive nature of their tax collection system and allow economic freedom to expand throughout the world. More than anything we can think of, that would spread freedom across the globe!

On Budget & Economy: Our tax code has chased $10 trillion to offshore deposits

On Corporations: Businesses don't pay taxes; they merely collect & pass on

I'll let you in on a closely guarded secret: those corporations aren't paying taxes now. When it comes right down to it, NO business really pays taxes. The burden--all of it--falls on us.

There is only one entity in this country that actually pays taxes, and that entity is the individual. Businesses merely collect the taxes from individuals and pass them on to the government. Taxes are paid from wages, and in this country only individuals earn wages. It's even accurate to say that the assets of our government are owned by the people--though exercising any degree of control over those assets might be difficult.

On Corporations: Offshore financial centers, OFC's, avoid all US tax

Between 1989 & 1995, more than half of all corporations doing business in the US paid no US income tax. Offshore financial centers have grown into a sophisticated draw on American capital, with many uses:
1. A multinational corporation may set up it own OFC bank. Such a bank can be used to pay for accounting, administration, investments, currency trades, and other functions, with little tax consequences and less stringent reporting and trading restrictions.
2. OFC's are used to set up international business corporations (IBCs), which are popular (because generally tax- & regulation-free) vehicles for managing investment funds.
3. Insurance companies use OFCs for reinsuring catastrophic risks, which often have lower actuarial requirements and capita standards.
4. Wealthy individuals use OFCs to protect assets and for tax planning.
5. Foreign wealth is often kept in OFCs, to be protected from weak banking systems.
6. Tax evasion and money laundering schemes are difficult to track down in OFCs.

On Corporations: Most IRS actions are against small businesses for FICA

On Free Trade: Punishing corporate tax structure moves HQ's abroad

When the corporate income tax disappears with the passage of the FairTax, this disparity will disappear, and this particular incentive to move American corporations offshore will have been eliminated.

If we were to pass the FairTax and eliminate all taxes on capital and labor, and tax personal consumption instead, we would be the only nation in the world whose companies could sell into a global economy with no tax components in the price system. Can you imagine what that would mean to corporate leaders around the world?

On Government Reform: Lobbyists manipulate and game the system

The money paid to the Washington lobbyists for tax code manipulation is just a small part of the total cost of complying with our tax laws. Money spent complying with the tax code is money that is not spent growing our economy.

On Social Security: Social Security is on the verge of financial collapse

America has always been a generous nation; we have always concerned ourselves with the problems of others as much as we have our own. That generous spirit, as it relates to Social Security and Medicare, is quickly driving both of these programs toward bankruptcy. We are facing a grave risk to the economic security of both the next generation of workers and the next generation of retirees.

On Social Security: Payroll tax increase is a lousy way to reform the system

Pres. Bush has proposed allowing workers to take a portion of their Social Security contribution and invest the money in one of a series of privately held packages of stocks and/or bonds. These packages would require some certification to prevent investors from being entirely speculative.

Over the long haul, it's clear that investments in the financial markets would produce far better retirement incomes than the current system. But that's over the long haul.

On Tax Reform: Tax withholding camouflages the actual tax burden

But the politicians weren't ready to throw in the towel. They saw that withholding was the one way they could camouflage the actual tax burden pressed on the American people and further their political dream of spreading the scope and power of the federal government.

So when WWII came along, it provided the political class with the handy excuse they're been seeking to put income tax withholding back on the table.

On Tax Reform: More complicated tax code means higher compliance costs

On Tax Reform: FairTax repeals AMT; estate tax; gift tax; & capital gains

The prices of consumer foods have already been driven up by a 22% embedded tax--a tax that drives jobs offshore and strains the budgets of low- and middle-class families. When passed and signed into law the FairTax will repeal:
• The individual income tax
• The alternative minimum tax (AMT)
• Corporate and business income taxes
• Capital gains taxes
• Social Security taxes
• Medicare taxes
• The Self-employment tax
• Estate taxes
• Gift taxes

On Tax Reform: Politicians should not decide who "needs" tax cuts

On Tax Reform: FairTax is absolutely not a VAT

No! Absolutely not!

"VAT" stands for value-added tax. The VAT is essentially a sales tax that is added at every step in the production of retail goods. The VAT is popular with politicians, for the very reason that the people should shun it: It's capable of producing huge amounts of revenue while remaining virtually hidden from consumers.

When VAT rates are increased, it looks like another increment of inflation to the unawar consumer. It's central to the design of the FairTax that it is added only once: at the point of sale to the retail purchaser. It's an upfront charge, not a series of hidden costs. If you hear someone refer to the FairTax as a VAT, you can be sure you're listening to someone who hasn't done his homework. Or who, for whatever reason, it trying to torpedo the FairTax.

On Tax Reform: AMT was introduced as a "spite" tax in 1969

The bad news? The AMT was never indexed to inflation--a little fact that eluded the average American during the debate in the AMT legislation, since most American taxpayers were completely uninterested in the proceedings.

Today, however, thanks to the failure to index the AMT, disaster is waiting around the corner. By 2010, about 35 million Americans will be forced to pay the AMT. The victims will no longer be just "high-earning individuals," but middle Americans.

On Tax Reform: Income taxes are seized; consumption taxes are voluntary

In short... income taxes are seized. Consumption taxes are paid. Which way do you want it?

On Technology: FairTax Card: register with feds for monthly prebate

The size of th monthly prebate payment will be based on the government's published poverty levels--in 2006, an annual consumption allowance of $26,400. This is the amount the government estimates you would spend during that one year to buy the basic necessities of life The sales tax on this amount would equal $6,072. The government would rebate this amount to you in 12 monthly installments of just under $506.

And consider this possibility: a FairTax Card! The government could issue such a card to every head of household. This FairTax Card would be much like your bank debit card, with a magnetic stripe identifying you and coded with your PIN. It would take a simple mouse click in Washington for your FairTax Card to be credited with your monthly rebate payment.

On Technology: Tax Internet sales the same as store sales

We envision a department of the Treasury to deal with Internet and catalog sales, with stiff penalties for those selling into our communities who do not abide by the law.

On Welfare & Poverty: Over 25% of cost of EITC is fraud

The EITC was passed to relieve lower-income Americans of the tax they pay for Social Security and Medicare. They are already relieved of paying income taxes to pay for--well, everything. So why should they be expected to pay for their retirement programs? This little piece of our budget has grown to $38 billion & it is estimated that over 25% of that is fraud.

On Welfare & Poverty: Americans don't give to charity for tax deductions

In 1980, the top marginal tax rate was 70%. That means that every dollar at the margin that was contributed to charity reduced the donor's taxes by 70 cents. Just 30 cents came out of his pocket. We gave $40 billion to charities that year. By 1988, we had dramatically reduced the top marginal tax to 28%, thus reducing the value of charitable contributions. We gave nearly $200 billion to charities that year. "Money" Magazine reports that the average American donates $1,600 annually, even though 2/3 of all Americans receive no tax deduction because they don't itemize those contributions on their tax returns.

Let's make it just this simple: How many people do you know who give money simply to get a tax deduction? With taxes at the 35% level, who would spend $1,000 to save $350?