WHAT IS THE FAIRTAX?
The FairTax (HR 25 in the US House and S 1025 in the US Senate) is a federal retail sales tax that replaces the entire federal income and Social Security tax systems, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare. More FairTax benefits: • No tax on used goods. No tax on business inputs. With the FairTax, if you choose to buy any new good or service, the sales tax is charged just as state sales taxes are computed today. If you choose to buy used goods – used car, used home, used appliances – you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for pers
FairTax is both a theory and a suggested plan to the US Congress that would eliminate all income taxes and the Internal Revenue Service (IRS) in its current incarnation. All taxes under FairTax, including social security, disability, or Medicare taxes would be eliminated, leaving Americans with a larger portion of their earnings. Additionally, FairTax would do away with taxes on capital gains, inheritance, taxes on businesses, and taxes on homes, at least at the federal level. Instead of levying taxes on these commonly taxed sources, a national sales tax of 23% on most goods and services would be instituted. Each month, people would get something of a tax break on their spending, up to the poverty level, in order to reduce tax burden on people with less money. Essentially, they’d get a tax rebate that would enable them to keep more money — proponents of FairTax call this a “prebate.” FairTax would then use taxes gathered to pay for social systems in place, like social security or Medic
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including: • A progressive national retail sales tax. • A prebate to ensure no American pays federal taxes on spending up to the poverty level. • Dollar-for-dollar federal revenue neutrality. • Repeal of the 16th Amendment through companion legislation.
