Every day, thousands of people immigrate to America to pursue the American Dream; a dream of economic prosperity, success and freedom. From 1945 to the mid-1970s, productivity in the United States experienced significant growth, and middle-class Americans shared in the gains. Their earnings increased in correlation to productivity increases. Middle-class Americans were thriving and making a life for themselves and their families.
Flash forward to today. Productivity has continued to rise, but so have the cost of living and the national debt, while earnings have remained stagnant due to payroll tax increases. More money is coming out of your paychecks than ever before, making the American Dream a concept of the past.
In today’s market, the average income of a college graduate in an entry level position in Georgia is $35,000. With this income, they fall into the 15 percent federal income tax bracket. Before taxes and with no deductions, their monthly income would be about $2,916. With the proper budget, that is a reasonable and doable amount of money to live on. However, once taxes are taken out, their take home pay is roughly $2,480 per month. This amount does not include state income taxes withheld, 401k contributions or health insurance premiums deducted.
In this scenario, there was almost $500 this person earned each month that they never saw, due to income tax. If this person performs well at work and receives a $2,500 raise, they will now be placed in the 25 percent federal income tax bracket, and the sad reality is that they will actually be taking home less money than they were before the increase in salary.
Income taxes, both federal and state, have contributed to the death of the American Dream. So, what can we do to restore it? Eliminate income taxes all together and replace them with the FairTax, a progressive, national sales tax.
The FairTax eliminates the confusion of our 73,000 page tax code and creates a simple and understandable tax system. Rather than being taxed on your income, you are taxed on your consumption. With the FairTax you will take home your entire paycheck and you will have more control over your financial future.
Currently, the American citizens who go to work every day to make a living and support their families are paying for all of the federal programs, like Medicaid and Social Security, through income tax. There are loopholes that make tax fraud and tax evasion all too easy. But, with a consumption tax, individuals who are in our country illegally or involved in illegal money operations, who pay no income tax, but still receive benefits like healthcare and education, will pay the FairTax every time they purchase a new item. It’s fair; it’s equal; it’s right.
Earlier this year, the Georgia and Florida Legislatures adopted legislation urging the U.S. Congress to repeal all taxes on income, and enact a national retail sales tax. Many other states are supporting similar legislation. The FairTax is the way to a proper tax reform in America. It will bring back the American Dream, and I will continue to support any proposal that allows Georgians to take home all of their pay, by eliminating income taxes.