FairTax – Expanding the Tax Base

EXPANDING THE TAX BASE AND INCREASING REVENUE UNDER THE FAIR TAX

It’s been said by those “in the know” (both Democrats and Republicans) that “the United States doesn’t need more taxes – it needs more taxPAYERS”. Here are several sources for more taxpayers:

1. ILLEGAL MIGRANTS. I’m not going to get into what constitutes an illegal migrant here. That is a subject for someone else’s blog. Let us assume that the Department of Homeland Security is close in their estimate that there are 11 million people currently in the US illegally. Though they add to their local economies in terms of goods purchased, these people enjoy the same benefits as Americans without paying for those benefits because they do not file income tax returns.

The FairTax automatically adds illegal migrants to the tax rolls because illegals will pay the FairTax on merchandise they buy.

THE NUMBERS: Between 69% and 81% of illegals work in the US at approximately half of average US wages. Let’s call that 75% who work for $20,000 per year (half the US average). That computes to over 8 million workers who earn $165 BILLION TAX FREE. Most remit about half their earnings back to their home countries and live off the rest. The FairTax would generate 23% of $82 billion, or about $19 billion dollars in tax revenues annually.

$19 BILLION

2. ILLEGAL DRUG TRADE. Good, bad or otherwise, people in the US purchase about $100 billion worth of illegal drugs from dealers in the country, according to US Senate studies. Assuming that figure is accurate, drug dealers take in $100 billion at 67% average profit for a total of $33 billion tax free. Spent, that amount would generate $7.6 billion in tax revenues annually under the FairTax.

$7.6 BILLION

3. PROSTITUTION AND PORNOGRAPHY. The prostitution trade in the United States is estimated to generate $14 billion a year, depending on whose studies one observes. Spent, that amount would generate $3.2 billion in tax revenues annually under the FairTax. Pornography is also a largely tax-free business, with the majority of it conducted on the internet.
Worldwide, it is estimated to be a $100 billion business, with $15 billion of it right here in the US. Spent, that amount would generate another $3.5 billion in tax revenue with the FairTax.

$6.7 BILLION

4. UNDERGROUND ECONOMY. Also known as “shadow economy”, tax-free entrepreneurial activity in the US is larger than the GDP of most other countries – to the tune of $1 TRILLION, as estimated by several economists. This does not include illegal drug trade, prostitution, counterfeiting or other illegal activities. And, due to the recent recession, it’s growing. From street vendors to bartering clubs to casual labor workers to “legitimate” non-filing businesses, the shadow economy produces what the IRS calls the “tax gap”. Using IRS figures, the tax gap is a $345 billion shortfall.

$345 BILLION

5. INTERNATIONAL VISITORS. People visiting the US from other countries spend an average of $2,871 FairTaxable dollars each when they come to our shores. Thank you, international travelers! All 58 million of you. Under the FairTax, you would spend a total of $166.5 billion, generating $38.3 billion additional tax revenue.

$38.3 BILLION

CONCLUSION

These 5 categories represent $416.6 BILLION potential in annual tax revenues – on top of what is currently collected. The FairTax is the ONLY tax system proposition capable of accomplishing such an astounding increase without harming any income category. In 10 years, with  a static rate, and disregarding all the other economic benefits to the US economy, the FairTax would raise 4 trillion, 166 million dollars in revenues – most likely a lot more than all the tinkering congress can do with the 70,000+ pages of the current tax code, all the while growing the US economy, employment and fully funding Medicare and Social Security.

TOTAL STATIC ANNUAL BENEFIT: $416.6 BILLION 10-YEAR STATIC BENEFIT: $4.166 TRILLION.

This is ALL YOU NEED TO KNOW, however more information is available at http://www.fairtax.org. And by all means, please browse the categories in this blog. There is a wealth of information at your fingertips!

Your representative’s name and contact information is here:
http://www.house.gov/representatives/

Your senators’ names and contact information are here:
http://www.senate.gov/general/contact_information/senators_cfm.cfm

We urge you to contact them by phone and/or e-mail and demand that they learn about and endorse or support HR25 (House of Representatives bill) and S13 (Senate bill). To maintain the status quo, DO NOTHING. The House bill has 62 cosponsors. We need more! The Senate bill has 8 cosponsors. We need more! Do your part to assure economic growth and stability in the US.
You are in charge, not the congress.

Remember: You do not need a parachute to skydive. You only need a parachute to skydive twice. THIS IS YOUR PARACHUTE!

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Seasoned citizen, songwriter, musician, pinstriper. Owner of ColorFoam 3D Signs And Stuff.

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Posted in FairTax, HR-25, Illegal Immigration, Income Tax, Tax Reform
7 comments on “FairTax – Expanding the Tax Base
  1. kicker51 says:

    Excellent summary of why the FairTax is a much better option than what we have now. And it doesn’t even touch on the fact that, under the FairTax, many of those who don’t pay taxes now, but don’t fit the listed categories, would pay something under the FairTax.

    One of the tactics we should use, when opponents denigrate the FairTax, is ask why they would rather protect pimps, prostitutes, drug dealers, and illegal immigrants, and put more of a burden on everyday Americans.

  2. Outstanding article, Bill! This shows how the FairTax is an effective way to close the “tax gap” created by the IRS and the current Internal Revenue Code. I believe one of the reasons so many people say “the FairTax rate would have to be higher to be revenue neutral” is because they don’t realize that the FairTax would increase the tax base by an estimated 70 to 115 Million people.

  3. Russ Gleeson says:

    Mind boggling! Why do they resist? Should’a been done this way from the beginning. Some sort of outline showing why congress resists/avoids the issue ought’a shame them publicly.

  4. Dale Donaho says:

    Great job Bill, Isn’t it a shame that the powers that be absolutely ignore such evidence of what could be. If only we could get them to pull their heads out of their A#@!

  5. FairTaxer says:

    Related Article: The Underground Economy – Illegal Immigrants and Others Working Off the Books Cost the U.S. Hundreds of Billions of Dollars in Unpaid Taxes

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