The FairTax Act | My Research and Thoughts

In 2005, the bi-partisan President’s Advisory Panel for Federal Tax Reform, formed by then-President George W. Bush, criticized the current U.S. tax system as being exceedingly complex, requiring detailed record-keeping, lengthy instructions, and complicated schedules, worksheets, and forms (“Executive Order” and “Members”). The panel contended that the U.S.’s current tax system penalizes labor, discourages saving and investment, and encumbers U.S. business competition (“Executive Order” and Rhodes).

Currently, there are two leading tax reform proposals that address the varying problems with the existing U.S. tax system. The first of these two proposals is referred to as the Flat Tax; this is a consumption tax model. The Flat Tax would “require citizens to file tax returns as they do now, paying tax on all spent money” (Hodge). The Flat Tax would eliminate estate and capital gains taxes, eliminate double taxation via a single tax rate system, and reduce compliance costs and “the tax system’s dead-weight loss to the economy” (Hodge).

However, it is the second of the two proposals that has gained the most ground in recent years. Many U.S. citizens and politicians have called for the elimination of U.S. federal payroll taxes, personal income taxes, corporate income taxes, and estate taxes, and these same individuals have called for the implementation of a national consumption tax, also known as a national retail tax or a national sales tax. Unlike the aforementioned tax reform model, this model “solely relies on transaction-based consumption tax” (Dalsgaard). The leading proposal for a federal consumption tax is H.R. 25/S. 296, known better to the public as the FairTax Act (“FairTax”). The sales tax rate, as defined in the proposed legislation and expressed inclusively, would be 23 percent of the total payment including the tax—or, $23 of every $100 spent in total (Regnier).

This begs a question; should the U.S. replace the federal payroll, personal income, corporate income, and estate taxes with a national consumption tax, namely the FairTax Act?

Part II to come.

Works cited to come.

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9 Comments

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9 responses to “The FairTax Act | My Research and Thoughts

  1. TruthSeeker

    You might want to mention that the President’s Tax Reform Panel also concluded that the FairTax wouldn’t work, the required tax rate would be absurdly high, and the tax burden under the FairTax would fall disproportionally on the middle class. Please read Chapter 9 of their Report.

  2. Hank Van Gieson

    And, the panel also noted that federal taxation of State and Local government consumption, as proposed in the Fairtax scheme, would be inappropriate under our republican form of government. In today’s world, it’s easy to forget that our Republic consists of two sovereign powers, Federal and State, each acting on the same citizens but with different responsibilities. Using the long held doctrine of intergovernmental tax immunity, the Supreme Court will likely throw out this portion of the Fairtax plan. The resulting lower tax base will require the Fairtax rate to be at least 38% exclusive, which is the rate retail merchants have to add to their costs at the cash register.

  3. You might want to mention that only those who stand to loose under an honest system oppose Fairtax. Under Faitax there would be fifty percent fewer lobbyists. NO IRS, no control of the collection of taxes by congress, No deductions, no tax up to the poverty level, Every one would pay their portion, illegals would pay tax, drug dealers would pay tax, non taxed cash transactions would dwindle to near zero if not to zero, NO hidden payroll and production taxes, return of manufacturing to the US, no corporate taxes theref0re no corporate welfare. No tax on interest, no tax on savings, Transparency in taxation AND the public would see just how much they are being ripped off by the Federal tax system and then they might become convinced it is time to change the way Washington is operating. There are no negatives to the average US citizen to eliminating the IRS (which is part of the fairtax plan) and implementing the Fairtax. If you really are interested in the truth, follow this link.

    http://www.fairtax.org/site/PageServer?pagename=about_main

    If you study the Fairtax you will find it is a HUGE improvement over what we have now. It takes the penalties that production now has and puts the burden on consumption. The more you spend on NEW items the more you pay in taxes. No tax on any hting that has already been taxed once. This is a great plan. Notice I am not afraid to use my name because I am telling the truth and this is a benefit to the USA

  4. Most items like this that require moderation do not allow posting of any thing the author feels is negative to the authors thinking.

  5. Richard

    No It will work because there is already a built in or hidden 22% tax on everything we buy. It’s called corporate taxes that business pay and passes along to consumers. So it would be eliminated when the Fair Tax is put in place. Thus with a 23% Fair Tax on new goods and services it will cost about the same. So the Presidents Tax Reform Panel did not read the bill and are not informed correctly. We need to read the bill and be informed correctly. The Bill is only 150 Pages. This system will work.

  6. You might want to check out my blog…I’m currently in the middle of a week-long series promoting the FairTax. Maybe it will make a good reference for your research or at least give you some new insight:

    http://theotherhalf.net/

    Let me know what you think. Good luck in your research!

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    ‘The Clone Wars’ is one of our featured shows. We’re hoping to round up a few people who can occasionally contribute perspective (via an article/blog) on the shows – maybe a recent episode, future direction, plot shortcomings etc.

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    Primarily a larger audience back channeled to your blog. We don’t pay but the site has a lot of promise and we’re pretty excited about getting it off the ground. Let me know what you think.

    Thanks

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