Fair Tax Act needs passage right away
Ron Petrucci's Sept. 24 letter addressing Charles Firth is right on a number of points. We have been running more than an $800 billion trade deficit. That can't go on for very long. Ron says we're a debtor nation and we are.
Our manufacturing continues to move overseas to "more tax friendly" locations. We can't exist by providing each other services. Picture everyone doing their neighbor's laundry. We need to produce products to exist.
What Ron neglected to say is that the reason for that migration is our tax system. Federal taxes and associated compliance costs comprise an average of 25.9 percent of prices of our goods and services. Imported goods and services arrive at our shores essentially tax-free, because most foreign governments encourage exports by rebating their taxes at their borders. We don't do that.
When we try to sell there, they add their taxes to our prices, so our goods and services end up bearing double taxes. American companies have a raw deal both ways. That's why they have trouble competing.
There is an answer, though in the form of HR 25, The Fair Tax Act. That bill is in the House ways and means committee. It is the most thoroughly researched tax bill ever.
For the second time, a group of noted economists recently wrote a letter to Congress and the president, urging them to pass it and sign it into law.
The bill already has more cosponsors than any other tax bill in 80 years. It is a grass-roots proposal. It will pass only if enough citizens support it and tell their representatives. If passed, the current federal tax system would be replaced by a national retail sales tax applied at the final retail sale and collected by the states.
Net retail prices paid would be about the same. Revenue raised would be about the same. Collecting a sales tax is much more efficient than collecting an income tax, it provides a steady revenue flow and everyone would pay.
It needs to pass now, though, before this president leaves office, because no first-term president will entertain changing the tax system, and Social Security will run out of liquid assets at about the end of the next president's first term.
Check the proposal out at www.fairtax.org.
Peter G. Malone
St. Charles