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Sunday, May 12 2013 11:00 PM

CHIP HOLLOWAY: This national tax plan is more equitable and much simpler

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    Chip Holloway

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I wrote an op-ed proposing tax reform back in 2010, but here we are in 2013 and our tax code is up to 70,000 pages with no end in sight. If you're like me and wrote a check to the IRS last month, how would you feel if you knew there was a proposal out there -- introduced in every Congress since 1999 -- that would have spared you from doing so? Starting with nine original sponsors, the bill, HR 25, has gained almost 70 supporters to date -- but only Reps. Darrell Issa and Tom McClintock from California -- and yet the American public has, for the most part, heard little about it.

It's called the FairTax, and it is exactly as named. No longer would almost half the country opt out of its tax burden but instead we would all equally contribute -- hence the name. We would all fairly share in all costs of government. That in itself should offer great appeal, but let me share some other great benefits.

FairTax enables workers to keep their paychecks free of federal withholding; allows retirees to keep their entire pensions; refunds in advance the tax on purchases of basic necessities; allows American products to compete fairly; brings transparency and accountability to tax policy; ensures Social Security and Medicare funding; closes all loopholes and brings fairness to taxation; and eliminates corporate welfare.

FairTax also reduces lobbying efforts in Washington, D.C.; promotes a smaller, more efficient, more effective government; collects taxes from illegal immigrants and the underground economy; ends the capital gains tax; ends the estate tax; and abolishes the IRS.

All of these taxes would be replaced with a progressive national retail sales tax that would allow you to bring home your entire paycheck. Better yet, to make sure the tax would not be unfair to low-income consumers, every household would be issued a "prebate" check based on the number of family members and not income. This would make sure those who only purchased basic necessities would not be unfairly impacted.

Imagine no more compliance cost embedded in what you purchase, allowing an average of 22 percent in savings for most of the purchases we make today. Former House Ways and Means Committee chairman Bill Archer often quoted an informal survey of more than 500 international companies in Europe and Japan; they were asked, "What would you do in long term planning if the United States eliminated all taxes on capital and labor and taxed only personal consumption?" Eighty percent said they would open a plant in America; the other 20 percent said they would relocate their entire company to the U.S.

American companies would no longer be encouraged to locate offshore, bringing millions of jobs back to the U.S., an interesting concept considering the historically high unemployment we face today. When Alan Greenspan was asked how many decades or years he thought it would take for the trillions of dollars hidden offshore to flow back into American financial institutions under the FairTax he said, simply, "Months."

We as individuals and corporations would begin to save an estimated $400 billion per year in compliance costs. Medicare and Social Security would now be funded not by just hardworking, taxpaying Americans, but also by tax cheats, illegal immigrants, drug dealers and more than 50 million foreign tourists who visit this country every year.

This is not a new idea. More than $20 million has been spent in research and development of FairTax. Many of the supporters, including myself have been involved for decades; I personally delivered the first FairTax book into the hands of former Ways and Means Committee chairman Bill Thomas right here in Ridgecrest. Rep. Kevin McCarthy, his successor, is not listed as a supporter, but we have gained substantial momentum. Still, the critics abound, most notably the elected members of Congress who gain the majority of their power by manipulating the tax code to support not only their out-of-control spending, but our behavior as well.

This bill would be a great tool in history to restore our economy and more importantly create transparency and restrict unbridled power. I encourage you to research for yourself. First go to www.fairtax.org, then get "The FairTax Book" followed by "FairTax: The Truth." Then educate your friends and neighbors and especially our elected representatives. Let's not let another decade go by without action.

Marshall "Chip" Holloway is the vice mayor of the city of Ridgecrest. Community Voices is an expanded commentary of 650 to 700 words.

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