The current federal income tax system is clearly broken-unfair,overly complex and almost impossible for most Americans to understand. But there is a reasonable, nonpartisan alternative before Congress that is both fair and easy to understand. A system that allows you only pay taxes on what you spend. The FAIRtax is a nation sales tax that treats every person equally and allows American businesses to thrive while generating the same tax revenue as the current tax code.
The FAIRtax is a REPLACEMENT not an add-on to the income tax. Under the FAIRtax, every person in the U.S. will pay a sales tax on purchases of NEW goods and services, excluding necessities due to the prebate. The FAIRtax rate after necessities is 23% compared to combing the 15% income tax bracket with the 7.65% of employee payroll taxes under the current system- both of which will be eliminated. Your paycheck will be what you earned without federal deductions giving you an instant raise in pay. The FAIRtax puts Social Security and Medicare on a more solid funding foundation. Instead of being funded by taxes on worker’s wages, which is a small pool, they will be funded by taxes on overall consumption by all residents.
The FAIRtax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax free. This prevents an unfair burden on low-income families. Tax evasion and the underground economy under the current system, costs each taxpayer an additional $2,500 every year. But by taxing consumption the FAIRtax puts everyone in the country at the same level at the cash register. Further, only citizens and legal resident are eligible for the prebate. The I.R.S. Is no longer needed. No more complicated tax forms, individual audits or intrusive federal bureaucracy. Retailers will collect the FAIRtax just as they do now with state sales taxes and remit to the state. All money will be collected by the states and remitted to the U.S. Treasury and both the retailers and the states will be paid a fee for their collection service. By paying taxes on what you spend, you will be in control of your financial destiny. You alone control your tax burden by how much or little you consume.
If you’re thrifty, you’ll pay lower taxes than someone who is not. Most importantly, you’ll be taxed fairly. For more information, go to FAIRtax.org
