Run Away, Run Away!

It’s that time of year again….
Even though Choice Earth is a small and straightforward endeavor, we don't dare do our own taxes. After a half hour of listening to the accountant talk about tax bases and agricultural deductions and sales tax and machine hire and depreciation on the plastic on the greenhouse, our only thoughts are, Run away! Run away!

Farm taxes are just a little too baffling for us, and we'd much rather focus on getting the potatoes in the ground. However, in our pursuit to understand the history of farming in the Heartland, Tim and I both have read some economic theory from time to time and we came across a proposed tax system for our country that sounded really interesting. It sounded so interesting that I'm sharing it with you, even though this blog is about farming and not taxes! It’s called the fair tax (www.fairtax.org). What the fair tax does is raise sales tax to 30% (which is equivalent to a 23% income tax) and eliminates every other tax. Then, people get credits back each year to cover the sales taxes paid on cost of living items like groceries and gas. It's not the flat tax, since it taxes spending rather than income. This system sounds very good to us for several reasons:

1. It generates the same amount of money the government makes now.
2. It rewards people who use their money wisely (save for retirement rather than blow it all on fancy dodads).
3. There are no loopholes for the rich. They end up paying the most tax (slightly more than they do now) by virtue of spending the most money on consumer items and services. However, if people with money use their money to invest in a community (like start a business that provides employment or donate to charity) they don’t pay taxes.
4. Low income people, while not necessarily paying less, won’t pay more than they do now. This is basically because they already get so many tax credits in our present system. But again, this system awards poor people who try to save money instead of buying bigscreen TVs (which in their situation isn’t the smartest choice).
5. Middle class people, who are for the most part ardent consumers, still pay less tax. This may save the middle class, many of whom are starting to struggle financially.
6. The IRS goes away. Billions of dollars are saved on a government bureau that confuses and sometimes just plain scares people.
7. People personally save money on tax preparations. Each year Americans spend more money on tax compliance than the U.S. government spends on the war in Iraq. From an economic point of view, the money going to tax accountants does not do real work. It does not create goods or services or help the flow of goods and services. In an economic sense, it’s paying billions of dollars to shift money into the government’s hands.
8. It simplifies life. Even the IRS says that if you call them and ask a question, the answer they give you may not be right and you are still liable if your tax preparation ends up being wrong because you listened to their advice. Last year a guy sent annual financials on a fake family to 47 different tax preparers and when he received back the 47 tax returns, no 2 returns were prepared the same way.
9. Retirees get to keep all of their pension payments and workers get to keep all of their paycheck. This gives people more freedom to use their money as they see best. The Fair Tax preserves the American tenets of "life, liberty, and the pursuit of happiness." (This quote is straight from the Declaration of Independence.)

10. It’s fair for everyone. All Americans get to choose how much tax they pay by deciding how much of their money they will spend on unnecessary consumer goods.

At this time of year, when Tim and I stare at the convulted mess of our taxes in despair, nothing sounds so appealing as the fair tax!