Fair Tax

The Fair Tax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax; a rebate to ensure no one pays federal taxes up to the poverty level, dollar-for-dollar revenue. This non-exclusive legislation puts an end to all federal, personal gift, estate capitol gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple federal retail sales tax.

Fair Tax provides a "prebate", so that no one pays taxes below the poverty line. A prebate is the government giving each individual the amount they would pay in taxes to live up to the poverty line. That way, the Fair Tax eliminates taxes for low-income individuals.

The Fair Tax taxes us only on what we choose to spend, not on what we earn. It doesn't raise any more or any less; it is designed to be neutral, so its cost is also neutral. The final cost for goods and services changes little under the obvious, and an intelligent solution to the frustration and inequity of our current tax system.

Those who are paid wages "under the table" would no longer have a tax advantage. They too would have to pay sales taxes each time they purchased goods of services, which might as well be the biggest advantage of appointing a consumption tax. Another advantage to implanting a consumption tax verses tax on earnings is that consumption tax does not tax savings, it only applies to the money that you spend.

Under a consumption tax system, a possible disadvantage is that some consumer goods or services could be taxed at a higher rate than others based on dictatorial rules such as one item being seen as a luxury or a "sin tax". Alcohol, for example, could be taxed at an excessive rate to hinder purchasing it. This use of a consumption tax policy could be abused even