Why Support the FairTax?

Tax reform has never been as necessary, or as possible, as it is at this very moment. Our country is awake and no longer blind to the burden brought upon us by the current tax system – an almost incomprehensible document with over 73,000 pages of loopholes and traps.

It is time for a change. The FairTax Act is the single best solution for economic recovery and financial stability, leveling the playing field for people in every tax bracket.

 Here are 10 reasons you want the FairTax, now!

  1. IRS no longer a threat to you or your business.
  2. Keep more of your paycheck – no withholding or payroll taxes.
  3. Savings and investments not taxed; encourages savings for home, education, and retirement.
  4. No taxes on necessities of life.
  5. Tax on the poor eliminated.
  6. Social Security and Medicare funded.
  7. Fair to all; no loopholes.
  8. Increased global competitiveness – Creates Jobs!
  9. Makes U.S. a haven for business – Creates Jobs!
  10. Fair – Taxes underground criminal economies.

Keep your entire paycheck (No more Payroll Taxes)

The FairTax eliminates both Federal income taxes and payroll taxes.  This allows American workers to keep every dime they earn.  When you look at your payroll check, your net pay will no longer be 30 to 40 percent less than your gross pay.

Maintain Social Security and Medicare Funding

These benefits will not change.  The FairTax will provide a stronger foundation for funding these programs when compared with the current system that has created trillions of dollars in unfunded liabilities that our children and grandchildren will inherit.  Instead of funding Social Security and Medicare from the payroll taxes applied to workers’ wages (a diminishing pool of current employees), these programs will be funded by taxes derived from total consumption of all residents and from foreign visitors spending in the domestic economy.

Obtain tax relief by qualifying for an Advance Tax Refund to ensure access to the necessities of individuals living below the poverty level

The FairTax Probate provides every legal resident household an “advance refund,” known as the probate, at the beginning of each month to reduce the sales tax burden of individuals and families living below the poverty level.

Each citizen pays Fair Share

The current tax system creates loopholes for individuals and businesses to legally pass on their tax burden to other citizens that are less politically connected.  Loss of revenue caused by tax evasion, illegal money operations, and the underground economy cost each honest taxpayer approximately $2,500 every year.  Individuals who are involved in the hidden economy would no longer be able to hide from a sales tax driven system.

Only pay tax on the Products and Services you Purchase

Instead of paying your taxes on the front end (when the income is earned), you can control your financial strategy to meet the current needs of your life.  You can take charge of your tax planning which will now be a function of consumption.  We will all be taxed fairly and based on our life situation not on the back room political dealings of the elite. And, you will able to reduce your tax burden by spending less or by purchasing used goods.

The IRS bureaucracy will be retired

Prepare for the end of the federal bureaucracy that most intrusively affects our private and public lives.  Removal of the complexity of the IRS tax forms, threats of expensive tax audits, and the questionable actions of this powerful agency will eliminate an unnecessary evil.  The FairTax utilizes state sales tax collection agencies to collect the national sales tax from businesses that charge the tax when purchases are made.  All the tax revenue collected by the states will be remitted to the U.S. Treasury.  Both individual state governments and business outlets will be paid a fee for their service.

Frequently Asked Questions

Yes, the FairTax is progressive! Even though the tax rate paid at the time of purchase is the same for everyone, the rich will pay a far larger percentage tax on their total purchases than the poor. When the prebate (tax rebate paid in advance to everyone) is considered, the poor will pay a zero-percent retail sales tax. Their prebate will offset their retail sales tax. And if they are careful with their spending and buy mostly used goods, which are not subject to the FairTax, they could receive more in the prebate than they spend on retail sales taxes.

On the other hand, the prebate (the same dollar amount received by the poor) will represent the tax on a tiny fraction of the amount of spending done by the rich, so their taxes will be much closer to the 23% maximum retail sales tax on their spending.

Social Security will operate the same as it does today. The only difference will be the source of the funds used to pay the benefits. The money will come from a progressive sales tax, rather than from regressive payroll taxes. Employers will report wages for each employee to the Social Security Administration, as they currently do, for the determination of benefits. However, they will not have to withhold any Social Security taxes from employee paychecks, nor will they have to pay the employer share of Social Security taxes. Self-employed individuals also will not have to pay any self-employment taxes.

Social Security will no longer be taxed when the employee earns the income, nor will it be taxed when the benefits are received

Medicare will operate the same as it does today. The only difference will be the source of the funds used to pay the benefits. The money will come from a progressive sales tax, rather than from regressive payroll taxes. Employers will no longer have to withhold any Medicare taxes from employee paychecks, nor will they have to pay the employer share of Medicare taxes.

Medicare will no longer be taxed when the employee earns the income.

Medicare will operate the same as it does today. The only difference will be the source of the funds used to pay the benefits. The money will come from a progressive sales tax, rather than from regressive payroll taxes. Employers will no longer have to withhold any Medicare taxes from employee paychecks, nor will they have to pay the employer share of Medicare taxes.

Medicare will no longer be taxed when the employee earns the income.

The FairTax rate is 23% when calculated in comparison to current income taxes. That is equivalent to 30% added on to the price of the product at the retail counter. Let’s explain the difference.

Income tax rates are considered tax inclusive. If someone says that they paid 23% in taxes, this means that for every $100 earned, $23 went to pay taxes. That person got to keep $77.

Sales taxes are usually considered tax exclusive. They are calculated on and added to the price of the product. A $77 jacket would have a tax of $23 under the FairTax, for a total cost of $100. That $23 of tax is a 30% sales tax on the $77 jacket. You could say that you spent $100, $77 for the jacket and $23 for the tax. The tax is 23% of the total cost of $100.

When talking about the FairTax, we use the tax-inclusive rate of 23% because we are comparing the FairTax to the tax-inclusive income tax. Regardless of which way we calculate the tax, the amount of tax is the same – $23 in our example.