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[[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 replaces all federal income taxes, including; corporate [[income tax]]es, gifts, estate, capital gains, alternative minimum, [[Social Security]], [[Medicare]], and self employment taxes, with a federal retail [[sales tax]]. <ref> Americans For Fair Taxation, “About the FairTax,” http://www.fairtax.org/site/PageServer?pagename=about_main</ref>  

'''The FairTax''' is a tax proposal that would replace all federal [[income taxes]] -- including corporate, gift, estate, capital gains, alternative minimum, [[Social Security]], [[Medicare]], and self employment taxes -- with a federal [[sales tax]]. The tax would be paid on the purchase of all new goods and services, and immediately collected at point of sale. <ref> Americans For Fair Taxation, “About the FairTax,” http://www.fairtax.org/site/PageServer?pagename=about_main</ref>  

Instead of being taxed on what citizens earn, the Fair Tax taxes on what citizens buy, this is known as a voluntary consumption tax. The estimated rate for the Fair Tax is 23 percent<ref> "Embedded Taxes Change Fair Tax Analysis",http://www.roanoke.com/editorials/commentary/wb/wb/xp-51569</ref>. One main proponent of the FairTax is [[Republican]] presidential primary contender and former [[Arkansas]] Governor, [[Mike Huckabee]].  

Instead of taxing "income", the Fair Tax would tax expenses. This is known as a consumption tax. The estimated rate for the Fair Tax would be 23 percent<ref> "Embedded Taxes Change Fair Tax Analysis",http://www.roanoke.com/editorials/commentary/wb/wb/xp-51569</ref>. Although often touted as a voluntary tax, this is not entirely true. Consumers can indeed forestall the tax by choosing not to spend money, or by electing to purchase only second-hand goods (which are not taxed under this proposal). However, at some point, all consumers must purchase new goods and services, including various necessities such as health care, food, fuel, phone service, etc. At that point, the tax would no longer be "voluntary" but mandatory. To help counter this effect -- and help make the tax "fair" -- expenses such as those listed would be offset to a certain degree by a prebate -- a monthly check issued by the government to each worker. However, given the income level of most Americans, the vast majority of citizens would end up paying some measure of tax on these items, prebate or no. The Fair Tax would therefore be in direct conflict with the Constitution, which prohibits Direct taxes (those paid on the necessities of life, or on any unalienable right) without apportionment. (See Criticism below.)<br />

==Proposal==  

==Proposal==  

The basic Fair Tax system includes the following<ref> American For Fair Taxation, http://www.fairtax.org/site/PageServer?pagename=about_main</ref>;

If passed, the Fair Tax would accomplish the following<ref> American For Fair Taxation, http://www.fairtax.org/site/PageServer?pagename=about_main</ref>:

*Abolishment of the [[Internal Revenue Service]] (IRS).

* Abolish the [[Internal Revenue Service]] (IRS).

*Abolishment of personal income taxes.

* Abolish personal income taxes.

* Removal of the [[16th Amendment]].

* Repeal the [[16th Amendment]].

* A probate to cover those under the federal poverty level<ref> Just how fair is the ‘Fair Tax’ CNN Money, September 2005,  http://money.cnn.com/2005/09/06/pf/taxes/consumptiontax_0510/</ref>..

* Provide each worker a monthly prebate, equal to the tax on "poverty level" income. <ref> Just how fair is the ‘Fair Tax’ CNN Money, September 2005,  http://money.cnn.com/2005/09/06/pf/taxes/consumptiontax_0510/</ref>

* Closes all loopholes and brings fairness to taxation

* Close many loopholes under the current system.

* Reimburses the tax on purchases of basic necessities

* Enable retirees to receive their full pension, untaxed, until they spend it. 

* Enables retirees to keep their entire pension  

* Enable workers to keep their entire paycheck, untaxed, until they spend it.

* Enables workers to keep their entire paycheck

==History==

==History==

[[Image:Fairtaxb.jpg|right|thumb|200px| A FairTax bus during a rally at the 2007 [[Republican]] [[Iowa Straw Poll]].]]

[[Image:Fairtaxb.jpg|right|thumb|200px| A FairTax bus during a rally at the 2007 [[Republican]] [[Iowa Straw Poll]].]]

The main support for the Fair Tax comes from the [[Republican Party]] as well as [[Libertarian]]s. [[Conservative]]s have continued to push for Republican presidential candidates to support the congressional Fair Tax bill, one such group was set up in Indiana, ‘Hoosier for Fair Taxation’<ref>”Fair Tax Supporters Vent Frustration”, June 2007, http://www.theindychannel.com/news/13651607/detail.html</ref>. <ref>”FairTaxer's continue to “flex their muscles”, July 2007, http://www.fairtax.org/site/PageServer?pagename=news_feature</ref>. [[Mike Huckabee]] has made a national sales tax as one of his main platforms. Economist [[Alan Greenspan]], has also shown support for the FairTax.<ref>Greenspan: Consumption Tax could Help Economy, Fox News, March 2005, http://www.foxnews.com/story/0,2933,149298,00.html</ref>

Most of the support for the FairTax comes from the [[Republican Party]] and the [[Libertarian]]s. A significant number of [[Conservative]]s want Republican presidential candidates to support the FairTax bill, including one group in Indiana called ‘Hoosiers for Fair Taxation’<ref>”FairTax Supporters Vent Frustration”, June 2007, http://www.theindychannel.com/news/13651607/detail.html</ref>. <ref>”FairTaxer's continue to “flex their muscles”, July 2007, http://www.fairtax.org/site/PageServer?pagename=news_feature</ref>. Former Arkansas governor and presidential candidate[[Mike Huckabee]] made passage of a national sales tax a part of his platform during his recent bid for office. Also, former Federal Reserve chief [[Alan Greenspan]] exhibited some support for the FairTax in a recent interview.<ref>Greenspan: Consumption Tax could Help Economy, Fox News, March 2005, http://www.foxnews.com/story/0,2933,149298,00.html</ref>

 

==Criticism==  

==Criticism==  

Republican presidential candidate, [[Rudy Giuliani]], criticized the Fair Tax when addressing a group at the [[University of Florida]] in July, 2007<ref> “Giuliani Jeered For Opposing Flat Tax”, Associated Press, July 2007, http://www.forbes.com/feeds/ap/2007/07/07/ap3891710.html</ref>. The former mayor stated that although he had to “study it some more I don't think a fair tax is realistic change for America. Our economy is dependent upon the way our tax system operates<ref> “Giuliani Jeered For Opposing Flat Tax”, Associated Press, July 2007, http://www.forbes.com/feeds/ap/2007/07/07/ap3891710.html</ref>."  

Republican presidential candidate, [[Rudy Giuliani]], criticized the Fair Tax when addressing a group at the [[University of Florida]] in July, 2007<ref> “Giuliani Jeered For Opposing Flat Tax”, Associated Press, July 2007, http://www.forbes.com/feeds/ap/2007/07/07/ap3891710.html</ref>. The former mayor stated: "I don't think a Fair Tax is realistic change for America. Our economy is dependent upon the way our tax system operates<ref> “Giuliani Jeered For Opposing Flat Tax”, Associated Press, July 2007, http://www.forbes.com/feeds/ap/2007/07/07/ap3891710.html</ref>."  

 

All 2008 Democratic presidential candidates have said that they do not support the Fair Tax proposal currently in congress, although [[Mike Gravel]] has indicated that he supports a new kind of tax system based around consumption rather than income.

Aside from political criticism, the Fair Tax proposal also suffers from serious constitutional infirmities.

==External Links==

==External Links==