FairTax - Wisconsin

The power to tax is the power to destroy!

We are taxing our jobs and destroying them!

Jobs and Taxes Nearly 50 years ago, I was hired to teach pre-algebra in Sparta, Wisconsin out of a ten-year-old text, which employed dozens of obvious everyday situations to illustrate the uses of algebra. Most of the text dealt with things like carpeting, fencing and seeding, but one chapter was on business and economics. Unfortunately, many of our present day politicians, economists, and bureaucrats are completely oblivious to a concept the textbook writer thought 60 years ago would be obvious to ninth graders not quite ready for algebra.

Businesses usually buy something, do something to it, and sell it at a higher price. What was paid for the item(s) in the first place was labeled (C) for Cost. The expenses involved in processing the items including labor, taxes, rent, utilities, packaging, advertising etc were called (O) Overhead. (S) Sales is the number of dollars that would be realized by reselling the improved items. Profit (P) is equal to what is left after both C and O have been paid for, or

P = S - (O+C)

Pretty Obvious isn’t it? If the Cost of the goods and the amount to change it (Overhead) is more than the S the selling price, then P is a negative number and the business is, or soon will be, no more.

Consider the effect on Overhead, when it must include not only the workers take home wages, but about 15% of the workers wages in Social Security, and the costs of medical insurance, retirement plans, not to mention the withholding of personal income tax that the worker never even sees. If there is still a positive (P) after all of this, the government taxes it twice, once on the corporation and again on the individual investor.

Can anyone still wonder why American jobs are going overseas? Taxing the Overhead only in businesses that operate in the USA is absolute stupidity in a global economy. Prices of American goods include this hidden taxation whether they are sold here or abroad. and usually, because of these hidden taxes, we cannot compete.

Our federal government receives only about 4% of its income on the sale of foreign goods sold here while collecting more than 90% on the purchase of American goods through taxes hidden in our prices. Go to the store and just try to find something made here. Notice too, that the expense of labor-intensive federal, state and local governments is similarly increased by social security and other taxes on labor.

Fortunately there is a bill in congress co-sponsored by about 10% of the members of the House that could remedy this situation. It is progressive in that it has a zero taxation rate up to the poverty level and taxes many things now escaping taxation because of the 50,000 pages of loopholes in the IRS tax code. The bill is called the Fair Tax and would do away with the IRS. If we impose the same tax on both things we produce here and imported items, there is a level playing field consistent with the concept of Free Trade.

Ever wonder why the entertainment, sports, and software industries are able to pay super high salaries and earn fabulous profits? It is simply because they are not labor intensive and most all of their expenses are tax deductible. Our so called Progressive Income Tax really isn’t very progressive any more.

If you care about jobs in America, support the Fair Tax and let’s fund needed social programs like health care and social security with taxes on consumption instead of on production.

http://www.Fairtax.org/

http://www.fairtaxvolunteer.org/news/index.html

R. Richard Layman

38 Oxwood Circle

Madison, WI 53717

Doings@Charter.net