SkipCaptcha
12,693
edits
Changes
Jump to navigation
Jump to search
Line 1:
Line 1: − + Line 67:
Line 67: − +
no edit summary
[[Image:FairTaxRally.jpg|thumb|350px|A pro FairTax rally in Florida]]
[[Image:FairTaxRally.jpg|thumb|350px|A pro FairTax rally in Florida]]
The '''FairTax''' is a tax proposal that would replace all federal [[income tax]]es — including corporate, gift, estate, capital gains, alternative minimum, [[Social Security]], [[Medicare]], and self employment taxes — with a federal national retail [[sales tax]] on personal consumption. The tax would be paid on the purchase of all new goods and services, and would be collected at the final point of sale.<ref> Americans For Fair Taxation, “About the FairTax,” http://www.fairtax.org/site/PageServer?pagename=about_main</ref> Thus, instead of taxing "income", the FairTax would tax spending. This is known as a [[consumption tax]] — a method for taxing income on the back end, when the money is spent, rather than when it is earned.
The '''FairTax''' is a tax proposal that would replace all federal [[income tax]]es — including [[corporate tax, [[gift tax, [[estate tax]], [[capital gains tax]], [[alternative minimum tax]], [[Social Security]], [[Medicare]], and [[self employment tax]]es — with a federal national retail [[sales tax]] on personal consumption. The tax would be paid on the purchase of all new [[goods]] and [[services]], and would be collected at the final point of sale.<ref> Americans For Fair Taxation, “About the FairTax,” http://www.fairtax.org/site/PageServer?pagename=about_main</ref> Thus, instead of taxing "income", the FairTax would tax spending. This is known as a [[consumption tax]] — a method for [[income tax|taxing income]] on the back end, when the money is spent, rather than when it is earned.
A consumption tax would have a positive effect on [[Savings rate|savings]] and [[investment]].<ref>{{cite news| url=http://online.wsj.com/article/SB112492381500022421.html| title=A Consumption Tax| work=The Wall Street Journal| last=Auerbach| first=Alan J| date=2005-08-25| accessdate=2008-02-05}}</ref> Supporters state the plan would ease tax compliance, increase economic growth, have incentives for international business to locate in the U.S., and increase U.S. competitiveness in [[Trading|international trade]].<ref>{{cite book| first=Neal| last=Boortz| coauthors=Linder, John| year=2006| title=The FairTax Book| edition=Paperback| publisher=Regan Books| isbn=0-06-087549-6}}</ref> The rate for the FairTax as proposed under current legislation is 23 percent of the total payment including the tax ($23 of every $100 spent in total—calculated similar to income taxes).<ref> "Embedded Taxes Change Fair Tax Analysis",http://www.roanoke.com/editorials/commentary/wb/wb/xp-51569</ref> This would be equivalent to a 30 percent traditional sales tax ($23 on top of every $77 spent—$100 total). Although some critics say it would be higher to be revenue neutral (take in the same amount as the current system).<ref> http://www.factcheck.org/taxes/unspinning_the_fairtax.html</ref> The effective tax rate for a family household would be variable due to the fixed monthly tax rebates.
A consumption tax would have a positive effect on [[Savings rate|savings]] and [[investment]].<ref>{{cite news| url=http://online.wsj.com/article/SB112492381500022421.html| title=A Consumption Tax| work=The Wall Street Journal| last=Auerbach| first=Alan J| date=2005-08-25| accessdate=2008-02-05}}</ref> Supporters state the plan would ease tax compliance, increase economic growth, have incentives for international business to locate in the U.S., and increase U.S. competitiveness in [[Trading|international trade]].<ref>{{cite book| first=Neal| last=Boortz| coauthors=Linder, John| year=2006| title=The FairTax Book| edition=Paperback| publisher=Regan Books| isbn=0-06-087549-6}}</ref> The rate for the FairTax as proposed under current legislation is 23 percent of the total payment including the tax ($23 of every $100 spent in total—calculated similar to income taxes).<ref> "Embedded Taxes Change Fair Tax Analysis",http://www.roanoke.com/editorials/commentary/wb/wb/xp-51569</ref> This would be equivalent to a 30 percent traditional sales tax ($23 on top of every $77 spent—$100 total). Although some critics say it would be higher to be revenue neutral (take in the same amount as the current system).<ref> http://www.factcheck.org/taxes/unspinning_the_fairtax.html</ref> The effective tax rate for a family household would be variable due to the fixed monthly tax rebates.
*Many claim that due to the nature of politics, while the FairTax might be enacted, all or part of the existing income tax might be preserved, resulting in the federal government having two means of taxation. The proposed FairTax legislation has a [[sunset clause]] that would eliminate the tax in seven years if the 16th Amendment is not fully repealed. However, there is no guarantee that the sunset clause would not be removed from the legislation prior to passing or later repealed by Congress.
*Many claim that due to the nature of politics, while the FairTax might be enacted, all or part of the existing income tax might be preserved, resulting in the federal government having two means of taxation. The proposed FairTax legislation has a [[sunset clause]] that would eliminate the tax in seven years if the 16th Amendment is not fully repealed. However, there is no guarantee that the sunset clause would not be removed from the legislation prior to passing or later repealed by Congress.
*Like an income tax, a sales tax has its own implications with regard to personal privacy rights.
*Like an income tax, a sales tax has its own implications with regard to personal [[privacy right]]s.
==External Links==
==External Links==