The FairTax: An Introduction

I am a big supporter of the FairTax proposal and wish to provide you the reader with a basic introduction. Before I get started, I think that you should know that all of the information in this article comes from “The FairTax Book” written by Neal Boortz and John Linder. If you find this subject interesting, then I suggest that you purchase and read this book. Please keep in mind that this is only an introduction, although I will probably provide more information on this topic in the future.



---------------------------------------------------------------
The FairTax Act of 2005 is legislation introduced to the Congress and the Senate that would fundamentally and radically change how U.S. citizens pay taxes. It’s a bipartisan effort that has received support from both sides of the isle.

The FairTax Act would repeal the following taxes;

• The individual income tax
  
• The alternative minimum tax
  
• Corporate and business income taxes
  
• Capital gains taxes
  
• Social Security taxes
  
• Medicare taxes (along with all other federal payroll taxes)
  
• The self-employment tax
  
• Estate taxes
  
• Gift taxes
  

Did you notice that “Corporate and business income taxes” are being repealed? In my opinion, this is the most important part of the plan. You must understand the fallacy of corporate taxes. Corporations are created to make money for share holders. They don’t pay for business taxes and neither does the share holder. Guess who pays for that. Yes, that’s right! You do. Every time you purchase a product you are paying for all those embedded taxes.

The other import point related to corporate taxes is that the United States has one of the highest corporate taxes in the world. This gives companies a competitive disadvantage to operate in the US over other locations. You know all those manufacturing companies that have moved overseas? Well imagine what might happen if the United States had NO corporate taxes. That would give this country a great competitive advantage.

So how would the government collect money? Well, all of these taxes would be replaced by a 23 percent sales tax on retail level items. Currently we are taxed based on our income, but under the FairTax plan we will be taxed based on what we purchase. You know all that money that comes out of your paycheck each month? Well, nothing would come out under this plan. You would receive it all back and instead pay your taxes when you buy stuff.

This plan also provides a provision to compensate for the basic necessities of life. Every household will receive a monthly rebate check based on the annual consumption allowance as calculated by the federal government. According to “The FairTax Book” this refund would have been $506 in 2006. The purpose of this refund would be to make up for necessities like milk, bread, and eggs.

So you may think are there any hidden benefits to this plan? HELL YES!!! You know those drug dealers, illegal immigrants, and prostitutes that don’t pay any taxes on their illegal incomes. Guess What? Under the FairTax plan they are going to be paying their fair share of taxes just like us law abiding citizens.

Well that concludes this brief introduction to the FairTax. As I stated in my introduction, I hope that your interest in this topic has grown. If you want more information then please visit http://www.fairtax.org/site/PageServer.