The Fair Tax proposed in HR25 would replace federal income and payroll taxes, Social Security/Medicare, self-employment, and corporate taxes.The Fair Tax has a national sales tax as it's basis, but it is more than that.  The Fair Tax is "revenue neutral" and a rebate to those below the poverty level ensures that the poor will not pay this Federal tax.  After repeal of the 16th Amendment to the Constitution, Americans would take home 100% of their paycheck (except for state and local taxes). Corporate taxes would end and businesses would be relieved the burden of complying with our currently complex tax code.  This can all be done while fully funding the federal government and current programs. 

Lets break down the details for U.S. citizens.

• Americans take home their whole paychecks.

With the relief on businesses, more will be employed and their checks will not be eaten up by Federal Taxes.  (though this bill has no effect on state and local taxes)

• The poor do not pay!

The most common uninformed criticism is that the Fair Tax punishes the poor.  Every household is paid a monthly rebate in advance to cover what taxes they may pay purchasing necessities up to the federal poverty level.  (A Prebate) The FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful.

• No tax on used goods, or goods for business use.

Similar to state sales taxes, if you buy something for business use, you pay no consumption tax. If you buy a used car, used home, or used appliance - you do not pay the FairTax.  With each personal consumption purchase decision you decide how much to spend and in effect how much will go to the government. Each good or service is taxed only one time; the first time a finished product is sold to the end user.

• No more hidden corporate taxes and compliance costs in a products price

According to Dr. Dale Jorgenson of Harvard University income taxes and the cost of complying with make up 20 percent or more of retail prices. Anything that affects a businesses costs in the end will affect the cost of it's goods or services. Today income taxes and corporate taxes are included in the cost of everything you buy.   For businesses to survive they must do things like raise prices, reduce cost/quality of materials, reduce labor costs, reduce shareholder profits...all things that mean in the end you end up paying for it. Corporate taxation impacts everyone, with the end of corporate taxation, competition will drives prices down, employment will rise, and retirement/pension funds will improve.

• Quit taxing our jobs!

Our current tax structure burdens U.S. exports.  By removing corporate taxes and compliance costs from exports, the FairTax puts the United States on a level playing field with the rest of the world. This would be a boon to manufacturing jobs.  Imports are subject to the same Fair Tax.  The compliance costs for US products would be much reduced in comparison to foreign systems.  Foreign investment in US businesses would likely increase.   And there would be less incentive to export jobs.

• Revenue neutral

Tax revenues would neither rise or fall in comparison to today.  With falling prices, even with the Fair Tax, products would generally cost no more than they do today.  And the poor receive a tax "prebate" check every month reducing their costs even further!

• No longer a Tax Criminal!

The IRS estimates that 25% are not fully complying with the tax code.  This is probably a conservative estimate of the underground economy. In addition  to this there is the drug/pornography economy which is thought to equal a trillion dollars of untaxed activity.  Now when a pusher takes his illegal earnings and  pays cash at the retail level, he pays the fair tax! The criminals pay their share of the tax, instead of potentially making us criminals trying to understand the current tax!

Where does your state's congressional delegation stand?

Americans for Fair Taxation have developed ascore card so you can see where your senators and representatives stand.  They are each rated as "For", "Against", "Leans For", "Leans Against", or "Will Not Commit".

For more information visit www.fairtax.org or call 1-800-FAIRTAX.