Phil Lavoie contacted me recently about why Queercents hadn’t posted anything about the FairTax plan. He believes the plan has a side benefit that would equalize the tax code for same sex couples. I will let Phil explain his viewpoint on this topic, but bottom line: it changes where taxes come from. Below are his words…
FairTax and why it is important to the LGBT community
Have you thought about what happens if your partner becomes ill? If you take care of them, could this be considered a taxable gift? If you own and live in a house together, but only one of you pays the mortgage, could this be a taxable gift? What about if one of you dies? Will you have to pay estate tax?
If you haven’t yet heard about the FairTax act, I encourage you to learn more.
FairTax equalizes the tax code for everyone, more importantly, for same sex couples. Today’s income tax requires same-sex couples to file as a single person, regardless of what they want to do. Same-sex couples are also unfairly taxed for situations that do not affect straight couples, as you can read below.
Mike Huckabee, running for president as a Republican, backs a same-sex marriage ban and supports the FairTax.
Mike Gravel, running for president as a Democrat, supports full marriage equality and supports the FairTax.
It is rare to find an issue where the liberal and conservative communities can equally see some benefits and rally around a common cause. As of the time of this writing, there are 67 bipartisan supporters of the FairTax act. I encourage you to become involved in the discussion and to urge your representative to join the list.
FairTax in General:
I need to begin by explaining a very important aspect of taxes. Corporations do not pay tax!
Corporations are a fictitious entity set up by people to have a common place to do business. The government may collect tax from corporations, but these corporations transfer the payment of these taxes to REAL individuals. Customers may pay a higher price for the produce. Employees may make a lower wage. Shareholders may make less of a return. Regardless, corporations do not pay taxes, people pay taxes. There is also a lost opportunity for beneficial goods and services; many do not make it to the public because companies can’t get past the tax implications of these decisions.
It is estimated that the embedded costs of taxes in what we buy today is approximately 22%. Some of the goals of the FairTax act are to eliminate these embedded taxes, as well as the income tax, the estate tax, the gift tax, etc… and replace it with a national sales tax of approximately 23%. Changing the need of the IRS as a governing authority over the 300 million American taxpayers and reducing their authority to the 20 million American businesses. Fewer entities would result in lower Fraud and improved control.
Remember that many people think of ANY form of tax as being unfair, FairTax tries to be as fair as possible.
There are quite a few provisions that I will not go into, but there are plenty of resources out there that explain these.
Here are a few bullet points:
- FairTax would allow people to keep more of their money and choose when to make a taxable contribution. Today’s tax code penalizes someone for getting a second job. In a FairTax would it would penalize someone for spending above the poverty level.
- FairTax would reduce Washington lobbyists – Ask the average person how much tax they paid last year and they will exclaim, “I didn’t pay any tax, I got a refund!” The paycheck withdrawal hides the amount of taxes that people pay. A sales tax would make the amount of tax someone pays blatantly obvious. This would help control bad spending and provisional earmarks in Congress.
- FairTax is good for the environment – FairTax specifies that the sales tax is only on NEW goods. Used goods would be tax free; this would force things to have a longer use cycle. If a product still has useful life, it would remain in circulation, as a new good would have a 23% tax. The wealthy would pay more tax dollars, but the rate would be the same.
- FairTax would cause growth – Ever hear of an offshore bank account? Do you know why the wealthy “hide” their money in these accounts? They do so to avoid the taxes that the US government charges. It is estimated that between $8 – 15 Trillion are contained in these tax shelters. Reduce that tax and this money floods back to the US to be used by banks and lending institutions for local loans.
- Filing Jointly - There would be no such thing as filing in FairTax, therefore equalizing this problem in our current tax code.
- Taxing Benefits - My partner receives his health benefits from my employer, but unlike my straight married colleagues, I must tax on his benefits. Does this sound fair? FairTax removes this inequality.
- Estate/Inheritance Tax – Today, if a same sex couple own assets together and one of the couple dies, the estate has to pay tax on these assets before it can be transferred to the other. Married couples do not have to pay as there is a right of transfer of their jointly owned assets. By removing the estate/inheritance tax, this situation goes away.
- Gift Tax – Many same sex couples own a house together. In a situation where one of the members of the household makes the house payment, the IRS can look at the other member as receiving a “gift” of equity and could be forced to pay tax on that gift should they be audited. Married couples do not face this challenge as assets are jointly owned. Gay couples are not legally allowed to pass money between them without resulting in gift tax that they should report to the IRS. Think about retirement age, or is one of them got ill and had large medical bills. FairTax eliminates this unfair taxation.
More about Phil Lavoie
Phil Lavoie grew up just outside Boston Massachusetts and has been working since he was 12. He’s been a newspaper boy, the guy who puts rubber bands on lobster claws, a caddie, and an IT support guy.
Phil has been living in the Midwest for over 4 years. He and his partner moved to Indianapolis in 2006 to have their money go further and to be able to put aside some for retirement. He spends a vast amount of his spare time worrying about finances and preparing his taxes. Phil is an avid fan of the FairTax act and hopes to create more fans out of the gay community.