With half of the eight AL-05 Congressional candidates supporting the FairTax, Patricia McCarter of The Huntsville Times decided to write an article about it.

It’s what propelled two of the eight congressional candidates to run.

Another two have agreed that if elected, they’ll sign up to be co-sponsors of it. What is it about the Fair Tax proposal - which would completely undo the way Americans pay federal taxes - that warrants the support of half of the 5th District congressional candidates?

“It untaxes the poor, and it’s just so bloody simple,” said Chuck Bailey, a retired Boeing engineer who heads North Alabama’s Fair Tax organization.

“Just imagine never filing another tax return, bringing home your entire paycheck and abolishing the Internal Revenue Service. Sounds pretty good, doesn’t it?”

Side note, Chuck is not British. Not sure where the “bloody” came from!

Overall McCarter did a very fine job covering the topic and I encourage you to read the article. You’ll even find a quote from yours truly if you decide to invest your time doing so.

As any diligent journalist should, McCarter sought out an opposing view for her article. She found Dick Hiatt, executive director of the Food Bank of North Alabama. I’m sure Mr. Hiatt knows the poor and their issues very well, but he didn’t seem to know much about the FairTax specifically or federal taxation in general.

“Prebates sound like a smoke screen to me,” he said. “I just don’t see how that can work. If it was just going to be charged on luxury items, go for it. But a sales tax puts a lot of stress on a government. What will it do when the economy isn’t ripping and roaring?

“It’s regressive and an unfair way to spread tax. Property tax is much more stable. Knowing what I know about how poor people live, I’d have to say that the Fair Tax isn’t fair at all.”

Remember - we’re talking about federal taxes. The federal government has no authority to impose property taxes on Americans so his tax stability point is irrelevant. States and municipalities can, but not the federal government. For Mr. Hiatt to make such a statement shows that he is not only under-informed about the FairTax, but that he doesn’t seem to understand how federal taxation works.  He’s clearly an advocate for the poor, though.  Any time you ask such an individual a question about taxes it’s like pulling the string in their back and getting the canned property tax response.  But, to tend to Mr. Hiatt’s point about tax base stability there is a study that compares the stability of the income tax base, which the federal government currently uses, to the tax base for a consumption tax, which the FairTax would use.  That study indicates that a consumption tax is more stable than an income tax - and since we’re talking about federal taxes that should placate Mr. Hiatt.

I’m actually kind of surprised that Mr. Hiatt would be so opposed to the FairTax, unless his position is based on a lack of topical knowledge.  The FairTax would completely untax the individuals he represents.  They may not realize it, but the poor bear a substantial federal tax burden due to taxes that are embedded into the cost of products they purchase.  Under the FairTax a poverty level family would pay absolutely no taxes - hidden or not - to the federal government.  Sounds like a good deal for the poor to me.

As I mentioned earlier, McCarter did include a quote from me reflecting my mixed feelings about having half the candidates support the FairTax.  It’s great that half of them realize that this is a bill that many voters in North Alabama support and it helps to have them out on the stump extolling its virtues.  But, with four candidates to choose from supporters may dilute their votes, thus harming the end goal of electing a representative who supports the plan.

Candidates who support the FairTax and have pledged to sign on as a cosponsor:

• George Barry
• Mark Huff
• Angelo Mancuso
• Ray McKee

Candidates who DO NOT support the FairTax:

• Parker Griffith
• Cheryl Baswell Guthrie - said it’s “a great concept, but let’s be real.”
• David Maker
• Wayne Parker - said it could “jeopardize the economy”

You can see each of the candidates explain their position on the FairTax in the WHNT candidate forum.  [Click on the link on the left titled "The Debate: Interactive Panelists Ask Questions from WHNT.com & Al.com."]

Congratulations to Chuck Bailey on a job well done explaining the FairTax and many thanks to Patricia McCarter for a well written article.

Note: The following is a letter sent to me from two tireless local FairTax volunteers.

—

Wake Up America and Smell the FairTax!

Chuck and Mary Lynn Bailey

FairTax Volunteers

28 May 08

While following the Alabama 5^th Congressional District race for the past few weeks, something became crystal clear to the most casual observer: truth and facts don’t matter. What does matter is the cleverness of the written phrase, or the sound bite or the TV news clip. What I’m writing about is the treatment of the FairTax Plan by several of the candidates running for the 5^th District Congressional seat being vacated by Rep. Bud Cramer. If accuracy of journalism is still a requirement, then the media should strive to know and understand the issues in order to properly report on them. Reporting on an issue with lack of subject knowledge typically results in misinformation that does a disservice to newspaper readers, radio listeners and TV viewers; in this case, the voters of North Alabama.

First, the FairTax is the most researched bill ever submitted to the House Ways and Means and the Senate Finance Committees. Over $22 Million dollars in private funding have been spent to develop the plan known as The FairTax Act of 2007. The Plan was defined by Americans For Fair Taxation, which was formed in 1995 as a 501 (c) (4) nonprofit, nonpartisan, grassroots organization solely dedicated to replacing the current income tax system. It began as a research organization with the initial goal of finding out what the American people wanted in a tax system, what they felt was the best way for the government to collect revenue, and how taxation could be achieved in a way that most benefited the economy and the taxpayers. Many diverse groups of Americans participated in the extensive polling and focus group studies, and then a nonpartisan team of nationally renowned economists was commissioned to develop the FairTax Plan. They came from Harvard, Stanford, MIT, Beacon Hill Institute at Suffolk, Boston and other well known universities and economic organizations, such as Arduin, Laffer & Moore Econometrics and the National Bureau of Economic Research. The organization is growing and has hundreds of thousands of members and volunteers nationwide. Its plan supports sound economic research, education of citizens and community leaders, and grassroots mobilization efforts.

FairTax FEATURES^*:

When the FairTax Bill (H.R. 25/S. 1025) is enacted as presently written, there will be no income tax whatsoever. Also written in the bill is that consumers will pay an inclusive 23% sales tax only on new products and services. That is, the FairTax is contained in the price of the product or service, not added on at the cash register. As a result, consumers will pay taxes when they want to, they will pay how much they want to and they will pay when they choose to spend their money on new products and services. There will be no more paperwork to do on April 15^th. The bill eliminates an agency that knows more about you than you are willing to tell your children and the same agency that knows how much you earn, how you earn it and how you spend it. It un-taxes those earning lower incomes and puts back into the economy the $400 billion - $500 billion wasted to collect $1.2 trillion in taxes.

INFLUENCE OF ECONOMIC FORCES:

Several huge economic forces drive us to the FairTax Plan. The economy is taxed at 18.5% for discretionary spending. At that rate, in 33 years, the entire income stream of the federal government will not be sufficient to pay the interest on the debt. That results in four economic forces that drive the FairTax:

1. Embedded taxes on products and services to the amount of 22%
2. Tax compliance costs
3. The underground economy
4. Offshore tax shelters

EMBEDDED TAXES:

22% of what we spend today is an embedded tax on everything we buy. Depending on the product, the tax ranges from 16% - 25% of the price. That is the cost added for income and payroll taxes, tax compliance, tax planning, etc., paid at each production step by the thousands of companies manufacturing products in the U.S.

TAX COMPLIANCE:

The Tax Foundation reports that filling out income tax forms costs $350 billion and time spent on those forms is typically 7 billion man-hours. Auditors and accounting firms report that $100 billion - $125 billion is spent yearly calculating tax implications of business decisions. The result is $450 billion - $475 billion to collect $1.2 trillion of income tax.

UNDERGROUND ECONOMY:

It is now known that the underground economy is $2 trillion - $3 trillion, resulting in a huge amount of income taxes on that money being lost. The more complex the code (presently 67,000 pages and growing), the easier it is to go underground. Enactment of the FairTax Plan (133 pages, double spaced paragraphs) will provide the method for taxing drug dealers, prostitutes and anyone else now escaping the income tax system. That is because the FairTax is collected on new products and services at the point of sale and everyone pays, no exemptions. The FairTax also goes a long way toward discouraging illegal immigrants from coming into our country to steal our Social Security and Medicare benefits while not paying into the system. They will have to pay the FairTax on everything they buy.

OFFSHORE TAX SHELTERS:

$12 trillion are deposited in offshore financial centers as tax shelters. These tax shelters consist of dollar dominated deposits: dollars to be safe, offshore to be secret, some of it legitimate and some of it illegal. At the same time, the total financial holdings of U.S. households are $16 trillion - $17 trillion. The $12 trillion sitting offshore “wants” to be in our economy, but can’t be, since the income tax would decimate its value. By eliminating the IRS code (the income tax) in accordance with the FairTax Plan, the United States will become the world’s largest tax haven. That means the $12 trillion will return to our country in months, according to Alan Greenspan.

THE FairTax, SOCIAL SECURITY AND WELFARE - BIG CHALLENGE:

As a part of the previous four economic forces, Social Security, Medicare and welfare must be addressed. Permanently fixing Social Security with the current payroll tax structure of workers paying for retirees will require the government to borrow $78 trillion to cover the cost. But, the total household wealth in U.S. today is about $58 trillion, which only covers 2/3 of the shortfall. Over the next 25 years, as the number of retirees increases by 100%, workers only increase by 15%. The present system can’t be fixed with payroll taxes, nor can it be sustained.

The FairTax fixes Social Security and Medicare in the short term. Of the 23 cents inclusive sales tax on new products and services, 15 cents will fund the government, 8 cents will be allocated to actual Social Security and Medicare trust funds. The tax base increases from 158 million income tax payers to 300 million FairTax payers at the point of sale. Also, the 50 million tourists visiting our country each year will pay the tax. Further, transitioning to the FairTax lifts the cap on the first $97,500 of income and changes to 100% of spending for everyone. The FairTax taxes wealth when it is spent, not income when it is earned.

THE FairTax PREBATE:

The FairTax is designed to totally un-tax lower income employees through a pre-tax rebate, or prebate. The prebate is based on the number of household members, not income, and will be implemented to totally un-tax each household up to the poverty level. It is a cash transfer to every legal household, rich or poor, in the form of a monthly check or electronic transfer to reimburse the taxes up to the poverty level set by Health and Human Services. The poverty level is defined as that spending necessary to buy essentials of life. Beyond poverty spending level, we’re all discretionary spenders and will pay the same consumption tax of 23%. However, the prebate makes the FairTax a progressive system, resulting in the effective tax (annual taxes paid divided by annual spending) being less than 23%. For example, a person spending at or below the poverty level has a 0.0 % effective tax rate, whereas someone spending at twice the poverty level has an effective tax rate of 11.5 %, at three times the poverty level, 15.3 % and so on.

To receive the prebate, each household will be required to verify that all members are legal residents and that each household member holds a legal social security number. To continue receiving the prebate, this information must be updated each year to reflect changes in status. This verification process is the only form required from individuals by the FairTax, but is not mandatory. If one wishes not to receive the prebate, no verification is required.

In 2005, the president’s tax reform commission scored several proposals for tax reform, including the FairTax. The commission reported that the FairTax was the only tax reform proposal out there that completely relieves the poor of the burden of paying federal taxes. What was being scored was the prebate explained above.

TAX EVASION:

One of the 5^th District candidates made the statement on WVNN’s Dale Jackson morning show yesterday that there will be more tax evasion under the FairTax, requiring additional personnel to police the system. He based his statement on a report done by the Brookings Institute. However, the Brookings report was based on a sales tax scheme devised by the Institute itself, not the FairTax Plan. Under the FairTax, two factors make evasion less likely: enforcement is reduced from 158,000 million income tax filers to approximately 25 million tax collecting retailers who receive ¼ of the tax receipts to offset collection and reporting costs, and the fact that it takes two to cheat the system: the retailer and the buyer. Fraud is dealt with in the plan. There is more evasion with the present income tax code because it is so convoluted and complex, thus allowing an individual to cheat the system and never be caught. The IRS estimates that its tax gap - the amount of taxes owed minus the amount collected - is around $311 billion in any given year. The same candidate also made other statements during WHNT’s debate concerning the FairTax being regressive. See “THE FairTax PREBATE” above. Based on the statements he has made about the FairTax, there is no reason to believe he is familiar with or has any actual knowledge of the FairTax Plan. He has been offered a tutorial by the writers, but has not accepted.

THE IMMORAL INCOME TAX:

The income tax manipulates behavior through a system of rewards and punishments and is not levied equally on all our citizens. The power inherent in this control is like a narcotic to politicians, leading to over 16,000 changes to the income tax code since it was “flattened” in 1986. The FairTax is just that - a fair tax - unlike the income tax that is rewritten twice a day on average to manipulate our behavior and grant benefits to some that it denies to others. As George Orwell put it, “…some animals are more equal than others.” The next time you hear a politician promise tax credits for laudatory behavior, remember that God gave us free will, but government doesn’t think we are ready to exercise it!

SUMMARY:

A new way of implementing taxes to cover the government’s operational, Social Security and Medicare costs is necessary. “Keeping the IRS in place will not fix the results of the four economic forces discussed in the previous paragraphs. Nibbling around the edges of the income tax code will not fix them. By enacting the FairTax we believe we can double the size of the economy in 16 - 18 years. The economy could grow enough to pay Medicare and Social Security costs. You’d double the monies which would be enough to pay those categories with non - inflationary economic growth, huge increases in exports, huge increases in capital investments and an economy that just couldn’t be slowed down. You can fix none of them with the income tax. You can fix all of them with the FairTax.”

To find out more about the FairTax, go to www.fairtax.org or find and study “The FairTax Book: Saying Goodbye to the Income Tax and the IRS” by Neal Boortz and Congressman John Linder, and “FairTax: the Truth. Answering the Critics” by Neal Boortz and Congressman John Linder, with Bob Woodall.

^*Discussion by Rep. John Linder (R-GA) at the American Solutions FairTax Workshop at the Iowa Caucus in Ames, Iowa, 11 August 08.

In order to better coordinate efforts of FairTax volunteers in North Alabama we have started a FairTax Meetup group for the 5th congressional district. You might have noticed the new Meetup badge in the sidebar. Please check it out and utilize it as a resource to stay in touch with other volunteers and keep informed of upcoming events.

Below is an email I received from an organizer of a FairTax rally in Nashville.

The Rally is Saturday, April 12, 2008, from 12:00 pm to 5:00 pm at the Riverfront Park in Nashville.  Attendees will need to arrive at the parking area (to be announced) by 11:00 am, since the Rally starts at the Riverfront Park at 12:00 noon.  Then, at 2:30 pm the march to the Capitol departs the park to be done by about 5:00 pm.

—

“A river a mile wide and a half inch deep.” This is what I heard a self perceived right wing conservatives say a few months ago when they were referring to FairTax supporters. At the time, he and his friends were trying to say that we were a very small group with a big mouth. It was their intent to minimize the FairTax and in doing so minimize a certain up-and-coming presidential candidate.

The media outlets have consistently played FairTax off with the same attitude. When it became clear that people were actually beginning to pay attention to what we have been saying, some folks started getting scared. This is evident in the constant hit jobs being slung out from every corner and by every profession where people see that their gravy train is coming under scrutiny.

We are having a Rally in Nashville at noon on April 12, 2008. We will meet up at the Riverfront Park, 100 1st Ave North. Different speakers will cover some points of discussion as to how FairTax affects many facets of our every day lives. We will muster up and march to the Nashville capital building at 2:30. As we walk we will show the community how wide and deep we are. Our group may be 500 people or it may be 50,000 people. Regardless of the number, we have to start somewhere and this is it. We will announce another soon to be staged rally in another city, and hopefully we can build from the momentum of this first one in Nashville. The next rally will be the second of many footsteps on the route to victory.

We must keep FairTax in the public eye. We must refuse to be ignored.

The purpose of this Rally is not to have ourselves entertained by eloquent speakers but to initiate an ever growing, ever visible force of Americans demanding a change in the way our government treats its people. This rally and the rallies to follow are about momentum and public exposure. It is about being on the streets waving signs in groups that hopefully number into the thousands at some point soon.

Help us take the first step by coming to Nashville in April.

We have had some requests for lodging in Nashville. Here are a few ideas.

LaQuinta Nashville Airport
2345 Atrium Way
615-885-3000 $79

Super 8 Airport
720 Royal Parkway
615-889-8887 $78.00

Thrifty Inn
343 Harding Place
615-834-4242 $45.99

LaQuinta Inn
531 Donelson Pike
615-885-3100 $79.00

Fiddlers Inn
2410 Music Valley Drive
615-885-1440 $49.00

Do you plan to attend? We would like to know! RSVP fairtaxrally@ gmail.com and tell us how many people will be coming with you. If the group is large enough, we will find a larger venue. Add your name and the names of those coming with you to the growing list of FairTaxers attending this event! Contact your friends and get them involved as well.

A small contribution from several supporters will help us keep the event free to the public. Will you help us raise funds for this and future Rallies? A contribution of $5, $10, $25 or more from each of us will help make this the first of many successful rallies. Click here and go to the contribution link on the right side of the page. Your help will be greatly appreciated!

Responding to an email from a viewer, WHNT interviewed Huntsville’s own tireless FairTax advocate, Chuck Bailey, about, what else, the FairTax.  It was a good interview with no editorializing or judicious cutting room antics to skew the message.  Click on the link titled “Good Question: Issue of The Fair Tax” just above the image of Ben Franklin.

Official FairTax Press Release (19 Jan 2008):

FairTax.org Volunteers from across the nation attended the American Farm Bureau Federation (AFBF) Convention in New Orleans, LA, as exhibitors on January 13th and 14th.  They came from Florida, Alabama, Missouri, Kansas and Nebraska.  The convention was attended to spread the word about the tax replacement proposal known as the FairTax.  Representing Alabama were Chuck Bailey, Volunteer FairTax District Director for Congressional District 5 and Mary Lynn Bailey, Huntsville Community Coordinator.  The Bailey’s and five other FairTax Volunteers – John Collet, KS, Tom Wright, FL, Don Dickerson, MO, and Judy and Floyd Zabel, NE – manned a booth to present information in the form of brochures, CD-ROM’s and DVD’s explaining the FairTax Plan to county delegates attending the convention from across the U.S.A..  The booth was popular and well attended both days.  The FairTax Team had two very successful days of “getting the word out” to the county delegates.

Most of the visitors were familiar with the FairTax from past conventions, but wanted more information about the proposal.  Through discussion, an 18 minute overview DVD, an interactive questions and answers CD-ROM and several written articles about the affects of the FairTax on ranchers and farmers, visitors to the booth received a good basic knowledge of the proposal.  The thrust of this activity was to enlist AFBF support for the FairTax, since the proposal satisfies all of Federation’s policy issues regarding the income tax.  As part of the activity, visitors applied for speakers to address their county boards to allow their local members to become more familiar with the FairTax. 

FairTax.org is a non-profit, non-partisan organization with the purpose of educating the American voters about the U.S. House of Representatives Bill, H.R. 25, known as the FairTax Act of 2007.  To learn more about this proposed legislation, go to www.FairTax.org or call 1-800-FairTax.

From the Dothan Eagle:

Dothan resident John W. Martin, who ran unsuccessfuly for a spot on the Dothan City Commission in 2006, officially announced his candidacy for U.S. Congress at Thursday’s annual Houston County Cattlemen’s Association annual meeting.

“I am dedicated, experienced and committed to serving the people of Alabama and representing you in Congress,” Martin told the Cattlemen’s Association.

Martin served for 23 years in the U.S. Army as an airborne ranger and AH-1 Cobra and Apache Attack helicopter pilot instructor.

Martin, who will run as a Republican, is touting that military background and his political inexperience as positives.

“I’m someone who’s not a professional politician,” Martin said. “The current pool of candidates doesn’t have any military experience, and a lot of people see that as a problem.”

“I hope he can win and accomplish the things he was talking about,” said Alabama Cattlemen’s Association President Max Bozeman.

Martin is an advocate of the FairTax plan, which calls for the elimination of income taxes in favor of a consumption tax.

“I’ve been the district director for the Alabama FairTax group for three years, and I believe in that,” Martin said.

“We have a tax system that is broken, and it’s not getting fixed,” he added. “I’ll fight to do what’s right, to abolish the income tax completely and bring in a 23 percent national retail tax.”

Here is a link to his campaign website.

Martin certainly faces long odds, but he’s going to put up the best fight he can.  He’s already resigned from his job as an Apache instructor to focus solely on the race.  And coming out with the endorsement of the president of the Alabama Cattlemen’s Association is nothing to sneeze at with AL-02 containing lots of farmers.

It’s that time again!  This month we’ll be meeting at the Creekstone Clubhouse in Creekstone Subdivision.  It is located southwest of the Hampton Cove area.  A general and specific map are shown in the attachment.  
 
What: Huntsville FairTax Meeting
Date:    Jan 17
Time:    7:00 pm
Place:  Creekstone Clubhouse
Where: Wade Rd, SE, Creekstone Subdivision, Owens Crossroads
 
There are no vending machines, so bring any refreshments you may need with you.

From Slate.com: Huckabee’s Tax Plan Is Brilliant (subtitle: So why is it getting trashed?).

Mike Huckabee is not my favorite candidate, though I relish the irony of an evolution-denier whose basic appeal is to voters’ most apelike instincts. But I do give him credit for one thing: an innovative tax plan that’s being trashed by journalists who almost universally fail to understand its consequences.

Journalists not understanding taxation and economics!  That is just unbelievable.

Read more about the FairTax here.

I’ve read quite a few articles and blog posts lately that are critical of the FairTax.  The common theme among them is that they identify flaws of varying degrees of significance with even wider degrees of accuracy.  It is easy to disparage it if you just make things up - like in this column where the author erroneously claims that the FairTax applies to school tuition.  Because the authors can identify perceived problems they relish in having dispatched the FairTax.  What they typically do not do is propose their own solutions to the very real problems with our income tax system that gave birth to the FairTax.  Some of these problems are inherent to a tax in income (productivity) and others are peculiar to the specific income tax system we employ.  There is a term for such people: naysayers.

I think that the standard response to these naysayers should be to ask them to either respond with their own plan or, more likely, defend the income tax.  Were Mike Huckabee to win the GOP nomination and I were called upon to advise his campaign that is what I would suggest he do.  When his Democrat opponent predictably attacked the FairTax don’t just play defense.  Ask he/she to turn towards hard working Americans and tell us why the income tax is better.  Tell us why we should:

• Punish productivity, discouraging hard work
• Encourage corporations to leave our borders for friendlier tax climes
• Keep handing over detailed personal financial information to the federal government
• Keep a tax system that breeds lobbyists like a stagnant southern pond breeds mosquitoes
• Force taxpayers to give the government an interest free loan
• Let politicians keep their most powerful social engineering tool
• Have to pay others to help us then pay the government
• Make individuals spend hours of our free time every year endeavoring to comply with federal taxes

I would just love to hear Obama or Hillary try to sell the income tax to voters.