[Congressional Record (Bound Edition), Volume 155 (2009), Part 10]
[House]
[Pages 12705-12706]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE FAIR TAX

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from South Carolina (Mr. Inglis) is recognized for 5 minutes.
  Mr. INGLIS. Mr. Speaker, I rise tonight to ask my colleagues that may 
be supporters of the Fair Tax whether we have got some parallel idea 
that we have been, that I have been talking about on this House floor 
for a while now.
  In the Fair Tax, what happens is you reduce taxes, income taxes, 
payroll taxes, those sorts of things, and you impose a tax on 
consumption. And the very good idea behind that is that you want to tax 
the things that you don't necessarily want to incentivize, and you want 
to free up from taxation those things that you do want to incentivize.
  So right now, under our current Tax Code, savings and investing, 
investments are treated shabbily in the Tax Code. Consumption is 
treated pretty well, because if you are a business, you can deduct 
those things. And so the idea is to turn that around. That's one of the 
good arguments for the Fair Tax.
  Now, of course, the downside of the Fair Tax is that it comes with a 
pretty substantial increase in the price of goods sold if they are new 
goods because it's a substantial consumption tax, perhaps 23 percent. 
Of course, Fair Tax proponents immediately point out that that wouldn't 
be the actual total increase in the price of a good because the income 
tax assumptions would come out of the pricing of that product; and so 
the dollar candy bar wouldn't be a $1.23, it would be something less 
than a $1.23 because the candy bar company would not have to pay income 
taxes, nor would the sugar company and all the components. Good 
arguments.
  So I am wondering if it's the same thing as what I've been talking 
about with a revenue-neutral carbon tax, the same kind of deal, that 
what we are doing here is we are switching what you tax, swapping out 
one tax for another.
  So in the concept that I have been describing here in a series of 
Special Orders, what we would do is we would reduce taxes on payroll, 
and that's something we want more of, labor industry income, and we 
would impose a tax, essentially a consumption tax, on carbon dioxide.

                              {time}  1945

  The result would be that the things that would be incentivized would 
be payroll, which is again labor, industry work. The thing that would 
be disincentivized would be carbon emissions.
  Now, the interesting thing is that it's sort of the son of fair tax, 
a much smaller impact than fair tax--what I'm talking about here when 
it comes to the dollar shock--because in the case of the fair tax, 
gasoline, presumably, would go up by a 23 percent sales tax. Natural 
gas would have a 23 percent sales tax. Electricity would have a 23 
percent sales tax on it. Now, of course,

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some of that would be knocked down by the income tax assumptions coming 
out of the provisions of those products, but the result would be a 
switch in taxes in the fair taxes. It would be a big, old switch from 
income taxes and from those sorts of things--payroll tax--to a 
consumption tax. What I'm talking about is that it would be sort of a 
small version of that where you would take reduced payroll taxes and 
then would impose a tax on carbon dioxide, but the difference between 
the two is this:
  In what I'm talking about, there would be an incentive to switch 
technologies, too. In the fair tax, you are talking about just hitting 
every new product sold with a 23 percent sales tax. In the case that 
I'm talking about, you would be just targeting one particular kind of 
product. The result would be that nuclear would be possible, that all 
kinds of new transportation fuels would be possible and that we would 
be breaking this addiction to oil, cleaning up the air and creating new 
jobs in this sort of son of fair tax, in this little, small version of 
a fair tax. That is the fair tax plus this very important technology 
shift.
  That's what I'm after, Mr. Speaker, is that technology shift that can 
give us an expansion of this economy and be part of the means of our 
growing out of this recession. We did it in the '90s with the 
productivity we got out of the Internet and the PC. I think we can do 
it again now with energy. Energy security is our ticket out of this 
recession. Similar to the tech boom in the 1990s, this is our 
opportunity to grow the economy and to clean up the air, to create jobs 
and, by the way, to help balance the Federal budget, because that's 
what happened in the late '90s. The growth of the economy because of 
the productivity from the Internet and the PC gave us new revenues.
  I think we can do the same thing in energy, but the start of it is 
getting the economics right, and if we do that, Mr. Speaker, I think we 
can help change the energy insecurity of the United States into energy 
security. It all starts with economics and with free enterprise making 
it happen.

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