The
I.R.S.'s Dirty Little Secret: Hidden Taxes
An Institute
for Policy Innovation report by Bryan Riley, Eric V. Schlecht,
and Dr. John Berthoud shows that the employers "share of
payroll taxes is actually absorbed by the employees. According
to Dr. Berthoud, "As small business owners know, employers
don't really pay half of payroll taxes. Instead, they're
forced to lower an employee's salary to cover the costs associated
with these taxes, which adds up to about $862 per year per employee"
(Business Wire 8/28/2001). As the synopsis of the
report states, "Federal income taxes represent only 42 percent
of the total tax burden of U.S. taxpayers. The remainder
is hidden, distorting taxpayers' awareness of their real tax burden
and of the true cost of government. Only fundamental tax
reform with an emphasis on visibility can ensure a fair tax code
that allows taxpayers to evaluate whether they are getting their
money's worth from government."
Research by
Dr. Dale Jorgenson, Chairman of the Harvard Economics Department,
indicates that under the FairTax, producer prices will come down
as the income tax and payroll tax embedded in the price of everything
we buy is repealed. His research indicates that electric utility
prices will immediately come down by 23½ percent because
of the repeal of the income and payroll tax. Similarly, telecommunications
prices will immediately fall 25 percent, and gas utility prices
will immediately fall 20 percent.
Carrie Ardelean
of Americans for Fair Taxation stated, "We applaud the Institute
for Policy Innovation for recognizing the intense frustration of
Americans with the current tax system and the need for total overhaul.
The plan proposed by Americans for Fair Taxation - the FairTax - will eliminate the hidden payroll
tax of 7.65 percent and the embedded taxes in producer prices.
Most importantly, the FairTax will allow Americans to keep 100 percent
of their paycheck."
Americans
for Fair Taxation is a non-profit, non-partisan organization dedicated
to replacing our federal income tax system with a simple, single-rate
federal consumption tax on the final purchase of new goods and services.
Established in 1995, Americans for Fair Taxation is headquartered
in Houston, Texas with an office in Washington, D.C. and is supported
by 418,000 members and Volunteers throughout the country.
To schedule an interview with one of our spokespersons, ask for
Genie Hayes at 1-800-FAIRTAX. For more information on the
FairTax, please visit www.fairtax.org.
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Posted 9/01/01
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