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[[Image:FairTaxRally.jpg|thumb|350px|A pro FairTax rally in Florida]]

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'''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>

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'''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 would be immediately collected at point of sale. <ref> Americans For Fair Taxation, “About the FairTax,” http://www.fairtax.org/site/PageServer?pagename=about_main</ref>

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Thus, 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 some critics say it would be closer to 33%.<br />

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Though frequently 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 which point the tax would no longer be "voluntary" but mandatory. To help counter this effect -- and to make the tax more "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 operate in direct conflict with the Constitution, which prohibits Direct taxes (those paid on the necessities of life, or on any unalienable right) without apportionment. Legal challenges to the tax would probably emerge shortly after its passage and lead to nullification by the U.S. Supreme Court for violating Article I, Section 9. (See Criticism below.)

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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==

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

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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>

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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 Indiana group 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. Former Federal Reserve chief [[Alan Greenspan]] also 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>

Proponents of the FairTax argue it would be more practical than the current system, which includes over 60,000 pages of tax code.<ref> 67,204-Page Code Confounds Taxpayers, Yet Congress Sits By, USA Today, http://www.usatoday.com/news/opinion/2007-04-03-edit_N.htm?csp=34 </ref>.

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==Criticism==

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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>."

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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>."

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

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All 2008 Democratic presidential candidates have stated they do not support the current Fair Tax proposal, although [[Mike Gravel]] has indicated he supports a new kind of system based around consumption (expense) rather than income.

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

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

==External Links==

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