I’d like to explain how the FairTax will be one of the greatest boons to homeownership and the home construction industry in the history of America.

I have been a Realtor since 1975 and a home builder/ developer since 1980 in the metro area of Minneapolis/St Paul, Minnesota.

First, the FairTax eliminates the imbedded expenses of income tax, payroll tax and tax compliance from all the products of our great nation. This has been estimated by economic scholars, including Harvard’s Dale Jorgensen, to average from 22% to 25% of the price of our products. Surely new home construction is at the high end of imbedded tax costs due to the thousands of components and man-hours in every new home.

When the actual cost of constructing a new house is at least 22% less, the FairTax just brings its price back to the level it is today. Since existing homes are not subject to the tax, all home values will remain about the same. But the consumption of all the materials, energy and labor that it takes to build a new home should be taxed. And when that consumption is taxed, new home sales will produce one of the largest portions of the fuel for the engine that powers our great country’s economy. That’s fair. That’s good for The United States Of America today and it’s in the best interest of our children’s children’s children -even those who will become Realtors and Builders tomorrow.

Now recognize that the FairTax will eliminate the same imbedded costs to provide loans. Mortgage rates will become competitive to the rates of tax-exempt loans. The bond market shows us that the difference between taxed and tax-exempt rates just happens to align with Dale Jorgensen’s prediction. Tax-exempt loans tend to be about 25% lower. So mortgage rates that are today say 6.5% will instead be more like 4.9%. That of course will be in the best interest of all our children who need or want a new home today as well as tomorrow.

But that’s not even the main reason for the great boon. The following is. Since tax withholdings are eliminated by the FairTax, take-home pay goes up instantly. Every American will have 100% of their income at their own disposal –including to save for a down-payment on their new home with pre-tax dollars. And since mortgage rates will be about 25% lower, many, many more Americans will qualify for mortgages. And all will qualify for larger mortgages. That can’t help but be a boon to the housing industry both immediately and into the future.

But what about the FairTax eliminating mortgage deductions? Over time, myths have a way of becoming assumed to be truths. Such is the case with the perceived benefits of mortgage interest deductions. First of all, over 70% of Americans don’t even file the long tax form -they don’t even take deductions. But even the 27% who do will come out ahead due to the facts above. (Calculation tables supporting this statement can be readily found on the FairTax web site.) Also, my 30+ years in the business have shown me that buyers just don’t purchase or select a home because of their potential mortgage deduction. Compared to the overall, nation-wide benefit to homeownership provided by the FairTax, even the rare few who can actually show a benefit within today’s archaic income tax system still come out ahead with the FairTax -by far, irrefutably. That the mortgage interest deduction is a “benefit” is false promise in the first place and its now being used by those who have a vested interest in the present income and payroll tax system as a tactic to scare the unaware away from the FairTax.

With the FairTax replacing our income and payroll taxes, not only do buyers of new homes win, but all who work in and around the housing industry win and that helps America win. The FairTax is good for home-buyers, home-sellers and home-builders as well as our kids and their kids and their kids and theirs….

Please visit www.FairTax.org to learn more.

“If we divide the 2001 net tax gap estimate of $255 billion by 130 million individual taxpayers, we can see that each of those taxpayers in 2001 paid, on average, an extra $2,000 to subsidize the unwillingness or inability of some taxpayers to pay their fair share.”

In 2001 the average taxpayer paid $8,265 in taxes. With an estimated tax gap – which is the difference between what taxpayers should pay and what they actually pay on a timely basis – of $345 billion, this means that the 130 million taxpayers paid on average $2,649 more in taxes to subsidize the unwillingness or inability of some taxpayers to pay their fair share.

In other words, if everyone paid the taxes they owed, average individual income taxes paid per taxpayer could have been 32.1 percent less.

Click to view the entire What the federal tax system is costing you – besides your taxes! Tax compliance facts white paper.

Americans take home their whole paychecks.
Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply).  No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks.

The prebate makes the FairTax progressive.
To ensure no American pays tax on necessities, the FairTax Plan provides a prepaid, monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level.  This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive.  However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful.  Do you see how much freer life is with the FairTax instead of the income tax?

No tax on used goods.  The amount you pay to fund the government is totally visible.
With the FairTax you are only taxed once on any good or service. If you choose to buy used goods − used car, used home, used appliances − you do not pay the FairTax.  If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax.  The FairTax is charged just as state sales taxes are today.  When you decide what to buy and how much to spend, you see exactly how much you are contributing to the government with each purchase.

Retail prices no longer hide corporate taxes or compliance costs, which together drive up costs for those who can least afford to pay.
Did you know that income taxes and the cost of complying with them currently make up 20 percent or more of all retail prices?  It’s true.  According to Dr. Dale Jorgenson of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices for everything you buy.  If competition does not allow prices to rise, corporations lower labor costs, again hurting those who can least afford to lose their jobs.  Finally, if prices are as high as competition allows and labor costs are as low as practical, profits/dividends to shareholders are driven down, thereby hurting retirement savings for moms-and-pops and pension funds invested in Corporate America.  With the FairTax, the sham of corporate taxation ends, competition drives prices down, more people in America have jobs, and retirement/pension funds see improved performance.

The income tax exports our jobs, rather than our products.  The FairTax brings jobs home.
Most importantly, the FairTax does not burden U.S. exports the way the current income tax system does.  The FairTax removes the cost of corporate taxes and compliance costs from the cost of U.S. exports, putting U.S. exports on a level playing field with foreign competitors.  Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S. manufacturing sectors.  At home, imports are subject to the same FairTax rate as domestically produced goods.  Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries’ value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match.

The FairTax strategy is revenue neutral:  Neither raise nor lower taxes so consumer costs remain stable.
The FairTax pays for all current government operations, including Social Security and Medicare.  Government revenues are more stable and predictable than with the federal income tax because consumption is a more constant revenue base than is income.

If you were in a 23-percent income tax bracket, the federal government would take $23 out of your paycheck for every $100 you made.  With the FairTax, if the federal government gets $23 out of every $100 spent in America, the same total revenue is delivered to the federal government.  This is revenue neutrality.  So, instead of paycheck-earning Americans paying 7.65 percent of their paychecks in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 25.65 percent, consumers in America pay only $23 out of every $100.  Or about 30 percent at the cash register when they elect to spend on new goods or services for their own personal consumption.  And this tax is collected only on spending above the federal poverty level, providing important progressivity.

Tax criminals don’t make criminals out of honest taxpayers.
Today, the IRS will admit to 16 percent noncompliance with the code.  FairTax.org will be generous and simply take the position that this is likely a conservative estimate of the underground economy.  However, this does not take into account the criminal/drug/porn economy, which equally conservative estimates put at one trillion dollars of untaxed activity.  The FairTax does tax this — criminals love to flash that cash at retail — while continuing to provide the federal penalties so effective in bringing such miscreants to justice.  The substantial decrease in points of compliance – from every wage earner, investor, and retiree, down to only retailers – also allows enforcement to concentrate on following the money to criminal activity, rather than making potential criminals out of every taxpayer struggling to decipher the current code.

What is the FairTax Plan?
The FairTax Plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion legislation, the repeal of the 16th Amendment.  This nonpartisan legislation (HR 25/S 1025) abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.  The IRS is disbanded and defunded.  The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn.  The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.