Greetings: Today is Tax Day and you can hear the collective moan from South Carolina to California. Oliver Wendell Holmes said, "Taxes are what we pay for civilized society.'' I agree, as long as they are fairly collected and spent wisely. Frankly, we all may better identify with famed humorist Will Rogers who quipped, "Income tax has made more liars out of the American people than golf." Congress regularly holds hearings to simplify the tax code and it only gets more complex. Currently, the Internal Revenue Code and regulations add up to more than one million words which far exceeds the length of the Bible. Worse, Congress blatantly promotes discrimination through the tax code. Americans would not stand for such discrimination on other taxes - imagine if each shopper at Wal-Mart was assigned a different sales tax rate! Income taxes are a bad idea that has gotten worse. The income tax is not an example of a good idea gone bad; it was bad from the beginning, and it just keeps getting worse. The income tax distorts financial planning and business investment, and it encourages tax avoidance and evasion. Because the income tax is built on an unworkable base of "income," the law is continually changing. It's time to simplify Americans' finances and disband the tax army by pursuing fundamental tax reform. I support a tax system that is FAIR for all. I support the FAIR TAX, nationally and for South Carolina. Since last September I have been traveling to the Capitol attending the meetings of the South Carolina Tax Realignment Commission (TRAC). They have been tasked by the legislature to recommend an overhaul of our state tax system. Listening to many days of testimony it has become clear to me that our state tax system is a hodgepodge of tax laws that are unfair in the new economy of the 21st Century. And legislators keep making the situation worse; look no further than the disastrous Act 388 passed in 2006. The current FAIR TAX bill in the SC legislature would change the method of tax collection from what you earn to what you spend. It would tax new goods and services and be collected at the point of sale. The FAIR TAX replaces the current state sales tax and eliminates all the sales tax exemptions which are greater in revenue than all the sales taxes currently collected. It would also be revenue neutral for state government. It captures money that's not taxed currently, income from illegal activities, cash for day labors, etc. It's aptly called the 'FAIR TAX' because it simplifies the tax code so you pay only one tax on that new good or service. Watching them closely, I sense the TRAC Commissioners are not interested in the FAIR TAX preferring instead to tinker with SC's existing taxes so the special interests and lobbyists can peck them to death for favors. If we're going to break from political business-as-usual in Columbia and make South Carolina a shining example to the rest of America, we should lead the way toward fairness and be the first state to implement the FAIR TAX. When elected to the Generally Assembly I will work diligently for passage of the SC FAIR TAX. It will be good for each of us because it will be fair and it will help improve our state economy by eliminating the corporate income tax and making South Carolina attractive for businesses to locate here for manufacturing and distribution as well as corporate headquarters and administration. More businesses mean more jobs and opportunities. Because there is so much misunderstanding and disinformation about the specifics of the FAIR TAX, our campaign staff has spent weeks researching the issue as it relates to South Carolina. We have boiled down the most relevant information into the following Q&A which should go a long ways toward answering specific questions. I know it's a bit long, but if you are interested in understanding the FAIR TAX, the following section should be most helpful. I hope you'll join me in supporting the FAIR TAX for South Carolina. Bill Taylor What is the FAIR TAX for South Carolina? The FAIR TAX is a change in the method of collection of revenue for the state of South Carolina from taxes on what you earn to taxes on what you spend. What taxes will be eliminated? Taxes that will be replaced by the FAIR TAX are; Personal income taxes, corporate income taxes, taxes on banks, income taxes on building and loan associations, estate taxes, and ABC taxes. How will the state collect the needed revenue? A tax on all new goods and services will be collected at the retail point of sale. The FAIR TAX bill replaces the current sales tax and eliminates scores of out-dated sales tax exemptions and exclusions as well as numerous special additional taxes in the current tax code. How much would the FAIR TAX be? The FAIR TAX is intended to be "revenue neutral", that is, the state will receive the same revenue after the change as before. Because that amount varies, exact calculations would have to be done when the bill is passed, but current projections show it to be between 6% & 7% in place of the 6% that exists today; NOT IN ADDITION TO IT. Any local sales tax would be added to this at the point of sales. Remember, however, that the income tax has been eliminated so salaries are not reduced by the state income tax deduction; the consumer is buying with untaxed dollars. Also, any products or services manufactured totally within the state of South Carolina will have the imbedded income taxes removed so the cost, and thus the prices, would be lower before the FAIR TAX is added. Why is it called the "FAIR" tax? The FAIR TAX captures taxes on money that is not taxed by the current income tax code. Income from illegal activities, "under the table" contracts, and casual day labor is most often not reported as income and taxes, therefore, are not collected on that income. Under a consumption tax, however, when a person buys a new good or service they pay the "FAIR TAX" one time on that good or service. What are the advantages for the taxpayer? There will be no income tax filing required because there is no income tax. The entire tax code is simplified; tax is collected at the point of sale of a new good or service. There is nothing for the taxpayer to do. A person's paycheck will not have a deduction for South Carolina income tax withholding. The current South Carolina sales tax codes will be amended to conform to US Congress bills HR-25 and S-296, the federal FAIR TAX bills now in Congress. How will the FAIR TAX code affect the poor? "Prebate" payments to all lawful households will be issued monthly to cover the taxes on purchases of necessary new goods and services up to the poverty level based on household size. The amounts and methods of payment will be consistent with those proposed in Federal HR-25. How will the "prebate" families be identified? There is no need to identify families to receive the prebate payment because since everyone in the state must buy goods and services that are necessary to living, every family will be entitled to a payment to cover the FAIR TAX paid on those purchases. This is similar to the current income tax personal exemption and standard deduction, available to everyone, which are actually for the same purpose. What will be the dollar amount of the South Carolina "Prebate" check? As an example, a couple with two children will receive an estimated $143 per month. This payment is meant to cover the FAIR TAX on goods and services up to the poverty level as determined by the Health and Human Services guidelines. The amounts vary by size of family ranging from one person at $61/month to a couple with 7 children at $269/month. Won't there be cheating and fraud involved in the prebate payments and the collection of the FAIR TAX by retailers? No system is foolproof, but the FAIR TAX plan offers less opportunity for fraud because it would require that both the retailer and the consumer be involved in the cheating. With the current income tax system, only the taxpayer's willingness to lie on his/her tax return is required for fraud to occur. The prebate will have certification requirements and public records are available to reduce the probability of fraud. How will the FAIR TAX affect seniors and others on a fixed income? Since the taxes on income are eliminated, the FAIR TAX would result in a net increase of resource for seniors depending upon their sources of income. There would be no state tax on any income including returns from investments, Social Security, or pensions. How can this work if we are the only state operating on the "FAIR TAX" system instead of the income tax system? Won't our prices be higher and thus not as competitive? There may be a difference in prices, but remember that difference exists today in such commodities as gasoline, tobacco, and alcohol products. Some of these prices will be slightly higher or lower than neighboring states, but that situation has caused no great amount of difficulty in the past and is not expected to be a problem in terms of sales in South Carolina in the future. How could the FAIR TAX affect jobs in South Carolina? Because the corporate income tax is eliminated, South Carolina becomes much more attractive for businesses to locate here for manufacturing and distribution as well as corporate headquarters and administration. More businesses mean more jobs and opportunities. Why not wait until the federal FAIR TAX bills are passed and then enact our FAIR TAX in South Carolina? The federal bill will require that the Constitution be amended and that process is both lengthy and detailed. Since the benefits to South Carolina residents are significant, we can be enjoying the results of the FAIR TAX long before the rest of the nation if we act now to become more competitive as compared to our neighboring states for the relocation of businesses, increased jobs, and simplified taxation process.