Business & Finance

Merits of Fair Tax Examined by Scotch Plains Residents

John O'Rouke, Fair Tax NJ Board Member and Tom Strowe, Board Member and Presenter

SCOTCH PLAINS, NJ – The Scotch Plains Republican Committee began their summer lecture series Wednesday evening with a presentation at the Rescue Squad by Thomas Strowe from Fair Tax NJ.

“This concept has many attractive aspects,” said Al Smith, Chairman of the Republican Committee in Scotch Plains. “This system would mean the elimination of all existing federal taxes, including payroll taxes and it would be replaced by a simple pro-economic growth federal sales tax.”

The Fair Tax concept presented by Strowe entails the removal of “a $430B dollar drag on our economy for the preparation of income tax forms resulting in the elimination of the IRS since the federal sales tax would be collected by the states, of which 45 already collect state sales tax.”

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Past Scotch Plains Mayor Joan Papen thought the concept well worth considering. “The Fair Tax meeting was very informative. It appears to be an excellent program which will especially benefit the taxpayers and our retail businesses. It would bring our big firms back to the United States and help to grow the economy.  There are many other advantages to a Fair Tax and I feel it is much better than our present income tax system.”

The tax is revenue neutral in that it would replace the revenue from all existing federal taxes.  The initial sales tax would be about 23 percent on products and services and would be collected by the states. Individuals and corporations would not have to prepare income tax filing. The fair tax would eliminate the underground economy from not paying taxes in that when someone buys a product or service they would be assessed the federal sales tax on their purchase.

“Since business would not pay income taxes, it would allow firms to bring home the trillions of dollars that have kept overseas to avoid federal income tax and they can offer their products and services for less,” said Strowe.  “Wage earners get to keep all of their pay and only pay sales tax when they buy a product or use a service.  You decide how to spend all of your money.”

Education and investments are exempt from the sales tax.  One member of the audience mentioned that it would have been a lot easier for him to pay for his children’s education if he had all his pay before income and payroll taxes were deducted so he could have used the extra money for tuition payments.

As the concept of Federal Taxes was established by the 16th amendment to the Constitution, it would be no small task to change it.  This type of change would take two thirds of Congress to approve, followed by approval by at least three quarters of the states. Additional information is available at

“I still have questions,” said Smith, “but the fair tax should be seriously considered by our representatives in Washington as a way to give people more control of their money and enhance economic growth.”

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