Letters to the Web Editor

Rusty Kuciemba recently wrote a Letter to the Web Editor titled, "The Fair Tax and why we need it." While doing away with the IRS is appealing to most, the so called fair tax is a bad idea.

Rusty is concerned about paying back his student loans and the high cost of college. He would be better served to work to undo some of the recent changes that have allowed tuitions to rise at an alarming rate and to work to restrain the student loan interest being charged. Check out Obama's plan, Clinton's plan and McCain's plan regarding lowering the cost of higher education.

This is an important election coming up, and the way we vote will directly affect the future of this country.

Below is the text from section 101 of the Fair Tax Bill now before congress. You will notice that the rate of 23 percent is mentioned for the first year only. This is 23 percent of the gross sale on all goods and services.

This means if you purchased $100 worth of food, including the 23 percent tax for the government, you would be getting $77 worth of food, which would then be marked up 30 percent to reach the $100. The 23 percent figure is deceptive.

Now look at item 2 noting the rate for after 2007 would be the rate to cover old age, survivors, and disability insurance rate (Social Security) and the hospital insurance rate (Medicare) plus the general revenue rate of 14.91 percent. Now there is no telling how high this rate could be. With baby boomers retiring, the social security and Medicare rates would rise each year. The rate of 14.91 percent really equates to 17.52 percent. Assuming the rate for social security plus the general revenue rate is 30 percent, then the true taxable rate would be equal to 42.857 percent.

The real problem comes for the senior citizen who has paid taxes all their lives and now pay no payroll tax and little income tax. Living on a fixed income, they would see their expenses rise by 30 to 42 percent. Which of you retired people, or those whose parents are retired, could imagine paying 30 to 40 percent more for food, utilities, gasoline, etc.?

Proponents of the fair tax claim that it will eliminate the IRS. This may be so, but there will be an agency to insure that this national sales tax is being paid to the Federal Government. You can bet on it.

The fair tax is a bad deal for Americans and just another scheme to shift the entire tax burden in this country to the poor and middle class. This idea is one of the biggest hoaxes around.

`SEC. 101. IMPOSITION OF SALES TAX.
`(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.
`(b) Rate-
`(1) FOR 2007- In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service.
`(2) FOR YEARS AFTER 2007- For years after the calendar year 2007, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.
`(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--
`(A) the general revenue rate (as defined in paragraph (4), and
`(B) the old-age, survivors and disability insurance rate, and
`(C) the hospital insurance rate.
`(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.
`(c) Coordination With Import Duties- The tax imposed by this section is in addition to any import duties imposed by chapter 4 of title 19, United States Code. The Secretary shall provide by regulation that, to the maximum extent practicable, the tax imposed by this section on imported taxable property and services is collected and administered in conjunction with any applicable import duties imposed by the United States.'

Bill Pelland
Murchison