Overview of the Fair Tax *
For further information, you can review the text of the Fair Tax (H.R. 25) and compare the benefits of the Fair Tax with the current system and other proposals at Congressman John Linder’s website or go to the Americans for Fair Taxation website.
The Fair Tax Act:
Repeals all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes.
Imposes a revenue-neutral personal consumption tax on all new goods and services at the point of final purchase. Business-to-business transactions and used products (which have already been taxed) are not subject to the sales tax. Rebates the sales tax on all spending up to the poverty level.
Results of the Fair Tax:
Dramatically reduce the costs of goods and services by 20 to 30 percent.
Allows you to keep 100 percent of your paycheck, pension, and Social Security payments.
Gross Domestic Product will increase by almost 10.5 percent in the first year after enactment.
Compliance costs would decrease by 90 percent.
Real investment would initially increase by 76 percent relative to the investment that would be made under present law. While this increase would gradually decline, it remains 15 percent higher than under the existing tax structure.
Exports would increase by 26 percent initially and would remain more than 13 percent above the level under the current tax system.
Real wages will increase.
Increases incentives to work by as much as 20 percent in many households, leading to higher economic growth and efficiency.
Interest rates will fall 25 to 35 percent.
Capture the revenue of criminals whose black market transactions are currently not taxed.
* from U.S. Congressman John Linder’s website