August 4, 2011, Manchester, NH – Meeting Thursday with small business owners at the Amoskeag Business Incubator in Manchester, NH, Presidential candidate and former New Mexico Governor Gary Johnson called for abolishing the current income and payroll tax system and replacing it with a consumption-based tax, known as the FairTax.

Endorsed by many U.S. economists, the FairTax Plan is designed to collect the revenue needed for the federal government from a broader tax base at a lower effective rate than the current system of taxing income. Taxpayers and businesses would pay no federal income or payroll taxes, but would pay a 23% tax on goods and services they buy. A “prebate” would be granted to all taxpayers, regardless of income, to offset payment of the FairTax on purchases of necessities up to the federal poverty level.

Johnson said, “There are many ways to describe our current 70,000 page tax code, but ‘fair’ is not one of them.

“It is simple economic common sense that the most equitable and sustainable system for providing the tax revenues we need is one which places the burden on the broadest base at the lowest possible rate.  Taxing income runs fundamentally counter to that goal, and it creates perverse incentives that stifle economic growth and kill jobs.  Changing to a system which taxes consumption, rather than earnings, will encourage savings and investment, provide American families more freedom to spend their hard-earned money as they choose, and put people back to work.”

Johnson continued, “With the ‘prebate’ provision of the FairTax, no one will pay taxes on expenditures for basic necessities, and the average taxpayer will pay a smaller portion of their income in federal taxes than they are now.  The result is an equitable tax that is progressive on the basis not of income, but lifestyle and spending choices.

“Likewise, as we watch the politicians in Washington haggle over whether or not various tax credits and loopholes should be closed, I would strongly suggest that it is time that we simply do away with all of them, and get the government out of the business of picking winners and losers and otherwise using the tax code to manage our behavior.  By treating every taxpayer and business equally, the FairTax will do just that. In fact, the FairTax proposal would abolish the IRS, and provide incentives for the states to actually collect the tax, using their own systems and experience with administering sales taxes.

“And, as the Administration and Congress wring their hands over our unacceptably and persistently high unemployment and talk about reducing the corporate income tax rate and adopting other half-measures, I say we do away with corporate income taxes altogether – which the FairTax would do.  That alone will foster more real job creation than all the stimulus and tax code tinkering that is currently being discussed, and would immediately move the U.S. to the head of the class in terms of global competitiveness.

“Rather than exporting jobs and losing employers to more friendly tax environments overseas, America would become a magnet for job-creating investment both by businesses who are already here and those who would come here.”

The FairTax and its 23% rate are designed to be revenue neutral, generating sufficient revenue to fund all government operations and existing benefits, including Social Security, Medicare and other entitlements.

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About Presidential Candidate Gary Johnson: Gary Johnson, a Republican and two-term Governor of New Mexico from 1994-2002, has been a consistent and outspoken advocate for limited, efficient government and personal liberty.