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'FairTax' Gains Support
Following is the news release issued on Herman
Cain's speech at the American Farm Bureau annual meeting this week.
TAMPA,
FL – Herman Cain's father worked as a barber, a janitor and
a chauffeur "all at once" to give his Atlanta family a
slice of the American dream—a modest home they could call their
own.
Today,
Herman Cain is chairman of Godfather's Pizza Inc. But he's never
forgotten his father's struggle to earn his dream, hindered by what
Cain calls an "abusive and intrusive" federal tax code.
Cain is volunteer chairman of Americans For Fair Taxation's (AFFT)
Tax Leadership Council.
AFFT
wants to replace the current complex income-based tax structure–in
Cain's words, "an 8 million-word mess" that has evolved
into "a new form of government"—with a 23 percent
nationwide retail sales tax called the "FairTax." During
the 84th American Farm Bureau Federation annual meeting, Cain campaigned
for farmer support of the tax, which already is gaining support
on Capitol Hill.
"The
current code is not fixable, folks," he told farmers. "We
must replace the tax code."
According
to Cain, the retail sales tax is designed to be "revenue neutral,"
replacing federal personal and corporate income taxes, payroll and
Social Security taxes, and gift and estate taxes, without significantly
altering federal tax revenues. A dedicated income stream from the
tax would be used to fully fund Social Security.
Two national
retail sales tax measures already have been unveiled in the House
this session, one by Rep. John Linder (R-Ga.), the other by Rep.
Billy Tauzin (R-La.). The sweeping measure would take producers
"out of the tax system entirely," as long as they or their
spouses were not involved in retail sales, said Tom Wright, an AFFT
official.
"A
farmer himself would be out of the tax business entirely: no alternative
minimum tax, no self-employment taxes, nothing," he said. "The
only place the tax is charged is at the final use by the person
who's going to eat the bread, drink the milk. There are no hidden
taxes cascading through the system. Producers won't be filing, they
won't have to hire a tax attorney. They'll just do their job."
The FairTax
concept is based in part on findings of a Harvard University study
of retail prices, which concluded corporate and other income tax-related
costs accounted for 20–30 percent of product retail prices.
Cain said families with incomes up to $85,000 typically pay 45 percent
of their earnings in income and payroll taxes, plus "four hidden
taxes in the costs of goods and services."
Countering
some arguments against the national sales tax, Cain said it "untaxes
the poor" and releases producers and others from an existing
tax code that "punishes sweat equity." Permanent elimination
of the estate tax is a major Farm Bureau goal for the 108th Congress.
"I
know some of you have had to sell the farm to save the farm, and
that's because of the tax code," Cain said.
Wright
reported that some state legislators have reacted favorably toward
the FairTax. The elevation of Sen. Charles Grassley (R-Iowa) to
the chairmanship of the Senate Finance Committee should bode well
for movement on retail tax legislation, he said.
The plan's
chief opposition likely will come from Capitol Hill tax lobbyists
and retailers who import most of their goods, he predicted. The
cost of U.S. exports currently "incorporates the cost of our
income tax system," and Wright suggested replacement of the
system would "make American producers much more competitive
with offshore producers."
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