COLUMN: A Fairer Way to Tax

Press Release

COLUMN: A fairer way to tax

Ronald Reagan once quipped, "The current tax code is a daily mugging." Come April, that mugging feels more like armed robbery at the hands of the IRS.

While April 15th is known as Tax Day, there's another important date coming up this month: April 22nd, Tax Freedom Day. You might be surprised to learn that Georgians will work from January 1 to April 22 this year just to cover their share of taxes. That's right: according to the Tax Foundation, it takes us 112 days of income to pay off our local, state and federal tax burden.

Three and a half months' salary is simply too much to pay in taxes. To change this, we need continued tax relief for our citizens, and fundamental tax reform for our nation.

I have proudly worked to make the child tax credit, reduction of the marriage penalty, elimination of the alternative minimum tax, and lower tax rates permanent for all American workers and families. However, the unfortunate reality is these efforts can be easily undone by Congressional majorities more interested in big government than small taxes. Nowhere is this more obvious than in the current U.S. House of Representatives.

After campaigning on fiscal responsibility, the Democrat leadership has already passed the largest tax increase in American history. Their 2008 Budget Resolution would raise taxes nearly $400 billion over five years, slapping Georgia workers with a $2,700 tax increase per person in 2011. One thing is clear: protecting our paychecks is not a priority for the new Democrat majority.

Only by fundamentally changing our tax system can we safeguard our incomes from the whims of a tax-happy Congress. While I strongly support legislation to lower taxes, I am also working to completely change the system by enacting the Fair Tax. This plan, long championed by Georgia Congressman John Linder, would stop taxing what we make, and start taxing what we spend.

I think we can all agree the only people happy with our current tax code are IRS agents and accountants. That's because, according to recent reports, Americans spend nearly $265 billion and 6.4 billion hours each year complying with the Internal Revenue Code.

The Fair Tax does away with the IRS altogether, and creates a national consumption tax in its place. This would drastically reduce taxes on lower- and middle- income families, and encourage innovation and economic growth.

Here's how it works. You would no longer pay income taxes on your paycheck, pension and Social Security payments. Instead, you would pay a retail tax on all new goods and services - 23 cents on every dollar. There would be a rebate for taxes paid on items like groceries and prescription drugs, so no one would be penalized for purchasing "life necessities." The retail tax would be levied only at the final point of purchase, so production costs and used items would be excluded from taxation.

Under our current system, the harder you work, the more you're taxed. We actually penalize success. Conversely, under the Fair Tax, the items you purchase - not the income you make - determines your tax bill each year.

The Fair Tax would create jobs and make America a welcoming place to do business. Lower- and middle-class families would have more money to spend on housing, healthcare, education and retirement. And best of all, April 15th would become just another day - we would close the doors on the IRS forever.

In 2007, Americans will spend more on taxes than on food, clothing and housing combined. That equation should be reversed. After all, the less we pay in taxes, the more we have to invest, purchase, create jobs and grow our economy. That's why government revenue has actually grown since Republicans cut taxes in 2001 and 2003.

As Congress debates a $400 billion tax hike and the new Democrat majority looks to increase spending on bloated federal programs, fundamental tax reform is more important than ever before. We need a tax system that puts people before programs, and lets economics trump politics.

America was built by sweat and labor. It's time our tax code stop penalizing hard work.

U.S. Congressman Phil Gingrey represents the 11th District of Georgia in Congress.

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