Replace All State & Federal Income Tax
Tax Reform Advocate Proposes
A Simple, Revenue-Neutral User Tax
“Corporations really don't pay taxes,” said Ron Babin, Michigan's volunteer deputy director of Americans for Fair Taxation, in his address to the Eastside Republican Club Forum at the Grosse Pointe War Memorial on February 20, 2007.
Pushing for comprehensive tax reform, Babin explained, “All costs of doing business, voluntary or otherwise, are merely transferred to the end-user in the form of higher prices.”
Calling for a fairer, more efficient and revenue-neutral tax, Babin said the cost of administrating the current State and Federal income tax codes and collecting dozens of imbedded, intermediate taxes creates a multi-billion dollar annual drag on U.S. economic efficiency.
He was quick to point out that these billions of administrative cost are not revenue collected by government, but money voluntarily expended by individuals and business for bookkeeping and administration in their effort to comply with statute.
According to Babin, in addition to a streamlined tax code with no April 15 income tax filing deadline to meet, the FairTax would make taxes more visible to end-users by removing all hidden taxes.
Babin describes FairTax as a progressive, simple and efficient national retail-only consumption tax that would replace all Federal taxes that are now based on income, including the funding of Social Security and Medicare. It is designed to generate exactly the same amount of revenue as at present, and would have no impact government spending decisions, he said.
To accomplish this goal, he advocates enactment of HR25 in Congress. That bill, known as the FairTax Act, currently has three times more co-sponsors in the U.S. House of Representatives than any other reform proposal.
In Michigan, the legislature is considering the Michigan version of FairTax as a possible tax reform/replacement for the eliminated SBT tax, and Michigan's tax system as a whole. >>More can be found at MIFairTax.org.
Babin told the forum that in the end, present tax complexity saps U.S. consumer purchasing power, and pushes jobs and capital offshore.
He said, “The present income tax system is substantially to blame for the thousands of jobs we have lost to international competitors.”
Babin explained that the U.S. tax system is a detriment to our ability to compete on world markets. Because there is no simple way to account for the layers of imbedded taxes when a U.S. product is manufactured for export, American-made products are placed at a competitive disadvantage.
The FairTax advocate pointed out that most U.S. taxes are collected as raw materials are passed through the supply and manufacturing pipeline and hidden from the ultimate user. When they are exported for use abroad, he said, the foreign taxing authority adds it own sales tax, further boosting the cost of U.S. products.
At the same time, imports from countries with more efficient tax systems can be sold here at lower prices than comparable U.S. products.
Another target of the nonpartisan FairTax, according to Babin, is elimination of the special interest lobbyist who is constantly pressing for tax code adjustments favorable to his client.
Babin is a businessman who has observed the effects of the current income and payroll-based tax system on employers and employment.
He grew up in Port Huron and has worked in small businesses since he was 13. He graduated from CMU in 1987, and went to work in accounting and management for a private multi-company manufacturing group based in metro Detroit.
In 1996, Babin earned an M.S. from Walsh College. He has since been self-employed assisting small businesses with their administrative functions such as internal accounting, database programming, spreadsheet, word processing, and Internet utilization. He also teaches software classes at St. Clair County Community College.
He is married, and has lived in Sterling Heights for 20 years.
