21
edits
Changes
specified personal consumption, doesn't apply to b2b
[[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]]. 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, 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.
In theory this would also allow the government to secure revenue from those who avoid paying taxes such as drug pushers of prostitutes, but who would still need goods and therefore pay under a FairTax system. 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.
In theory this would also allow the government to secure revenue from those who avoid paying taxes such as drug pushers of prostitutes, but who would still need goods and therefore pay under a FairTax system. 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.