Inez Tenenbaum didn't tell the WHOLE!! story.

NATIONAL 23 PERCENT SALES LEVY
'Fair tax' deserves a second look

JIM ULLOM


Now that South Carolina's U.S. Senate race has been decided, it is time to address income tax reform without the politics. You've heard [Inez Tenenbaum's] assertions that [victor Jim DeMint was advocating] a 23 percent sales tax on everything you purchase. Now it's time to hear, as Paul Harvey says, the rest of the story.

The fair tax proposal covers three basic areas:

Payroll taxes. Each payday, I lose 17.5 percent of my paycheck to taxes

(10 percent to income tax, 6.1 percent to Social Security and 1.4 percent to Medicare). This fair tax proposal would let me keep that 17.5 percent.

My employer would no longer pay corporate income taxes or the employer portion of my Social Security and Medicare taxes (another

7.5 percent of my salary). Economics experts predict that companies would be able to reduce the cost of their product by 25 percent to 30 percent by removing these "embedded taxes." Market competition would then force companies to lower their prices to remain competitive.

Prebate. Based on the federal poverty guidelines, my wife and I would receive a $240 check from the government each month. A family of four would receive $361. This "prebate" would be sent to every household that chose to register. This ensures that no one would end up paying the sales tax on the basic necessities of life. The combination of this prebate and the additional 17.5 percent no longer being withheld from my paycheck would more than compensate for the additional sales tax, even if no one was willing to reduce the price of their products.

Consumption. A national retail sales tax of 23 percent (or less) would be added to purchases of new goods and services. Used goods, education tuition. Prices of retail items would be expected to drop by at least 20 percent due to the removal of the embedded payroll taxes mentioned previously. Adding the 23 percent tax back onto the lower priced item would result in a "wash" - no real difference in the total paid. In addition, state sales taxes would be figured on the lower cost of the item.

This proposal would eliminate the need for tax shelters, tax credits, tax offsets, etc. You would no longer be forced to bare your soul to the Internal Revenue Service and be considered guilty until proven innocent when undergoing an IRS audit. The underground economy (drug dealers, prostitutes, gamblers, etc.) would end up paying federal taxes when they buy a new car, fancy clothes or glitzy jewelry. The IRS (as we know it) would be abolished. The only policing necessary would be to audit RETAIL business returns. Those returns could be simple - "what's the value of your sales?" and "send in 23 percent of it." That's the ultimate in flat taxes.

This proposal would also promote savings, since we would no longer be taxed on the interest we earn or on the gains we make in the stock market. The expected increase in consumer spending would translate into increased manufacturing and subsequent job growth.

Finally, April 15 would be just another day. We would never again be required to spend hours explaining what we earned and why we feel we should get some of our money back.

This idea has been more than 10 years and $22 million in the planning. It may not be perfect, but it beats the heck out of the out-of-control income tax method we currently have to endure.

You can learn more about this proposal and its sponsors by visiting www.fairtax.org.