Detroit News - Social Security / Fairtax

Wednesday, December 22, 2004
Tax and Social Security reform go together By Kevin Brehmer

Thomas Bray's Dec. 12 column, "Bush needs to be less radical with second-term choices," omits the
possibility of accomplishing two things with one reform. Bray believes President George W. Bush might
be too ambitious tackling judicial appointments along with both Social Security and tax reform.
President Bush is poised at just the right moment in history to simultaneously accomplish both. This unique
opportunity is not likely to occur again in our lifetime. Choosing a consumption tax called the fair
tax would strengthen Social Security while simplifying Americans' taxes.

We in Michigan learned how difficult politicians have it in balancing our budgets at both the state and
national levels. One contributing factor with Washington politicians is that they rely on a revenue
source, income, that is far more volatile than another source, consumption.

Income tax revenues soar into government coffers with an expanding economy due to new job creation, tempting politicians to spend more money uncontrollably thereby leaving themselves with new increased spending to cover when income tax revenues inevitably contract with the next recession. The cyclical nature of our economy necessarily leaves a great deal of uncertainty to those designing each year's budget.

Consumption taxes, however, will ameliorate this uncertainty, providing a steadier tax source to any
state, or hopefully, our national government since all consumers necessarily must buy a certain amount of
commercial goods. This steadier tax stream will, in turn, make budgeting easier since our elected
congressmen and senators can more reliably predict what tax revenues will be from year to year due to
these lower amplitudes of volatility. The fair tax does eliminate loopholes since it completely replaces the existing Internal Revenue Code with all its complexities. This greatly simplifies
doing taxes since no business will ever again pay payroll taxes, which include Social Security, Medicare
and Medicaid. No tax records will ever again be necessary. Quarterly filings will be a thing of the
past. No American will ever again file income taxes. April 15 will become just another beautiful spring
day. Since Social Security will have an entirely new funding source, it will receive more revenue than it
currently receives due to a rapidly expanding economy. How do I know this will happen? Simple, the amount of money Americans spend complying with the income tax is
estimated to be $250 billion to $700 billion annually.

This money will be freed up for the private sector to spend or invest in creating new business opportunities
and jobs. This amounts to an annual tax cut of $250 billion to $700 billion for businesses.
Tax and Social Security reform need not be one dimensional. We can do both together.

Kevin Brehmer
Adrian

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