The current federal income tax system is clearly broken – unfair, overly complex and almost impossible to completely understand. There is however a reasonable and nonpartisan alternative that is both fair, efficient and easy to understand and that is the FAIRtax (HR 25).
The FAIRtax is a national sales tax that treats every person equally and allows American businesses to thrive while generating the same tax revenue as the four-million-word-plus tax code we now live under. The FAIRtax is NOT an add-on but a REPLACEMENT of the current income tax.
Under the FAIRtax, for the first time in recent history, American workers will bring home what they earn with the elimination of federal withholding from their paychecks giving them an instant raise in take-home. Social Security and Medicare benefits will not change. In fact, the FAIRtax actually puts these programs on a more solid foundation. Instead of being funded by worker’s wages, which is a relatively 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 household an advanced refund at the beginning of each month so that purchases made up to the poverty line level are tax free. This prevents an unfair tax burden being placed on low- income households.
Once an item has been taxed (when new) it is not taxable again eliminating the double and sometimes triple taxation that comes with todays income tax system. You, the American taxpayer, will be in control of how much you pay in taxes through your spending habits not on how much money you make. If you are thrifty, you will pay lower taxes than someone who is not. Tax evasion and the underground economy costs each taxpayer today an additional $2,500 every year. But by taxing new products and services consumed, the FAIRtax puts everyone in the country on the same level at the cash register.
Under the FAIRtax, the dreaded IRS will no longer be needed. There will be no more complicated tax forms, no individual audits and no intrusive federal bureaucracy requiring you to tell the government more about your financial life than you are willing to tell your own children. Retailers will collect the FAIRtax at the cash register the same as they do now for state sales taxes. They will then submit it to the state taxing authority which will in turn pass it along to the US Treasury. Both the retailers and the states will be paid a fee for their collection services.
For further information regarding the FAIRtax please go to FAIRtax.org
