Let's Take
Fair Tax
The FairTax bill has been pending for almost ten years. During this time, millions of dollars have been spent on sustaining tax committees, and ultimately these ten years have yielded nothing. Instead of tax reform, our Congressmen continue to add thousands of pages to an incomprehensible tax code. It is time to change this, and Ray wishes to dedicate his entire term to getting the FairTax bill passed.
As it states on www.fairtax.org, The FairTax is replacement, not reform. It replaces federal income taxes including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes. The FairTax is a single-rate, federal retail sales tax collected only once: at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive.
All valid Social Security cardholders who are U.S. residents receive a monthly prebate equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The prebate is paid in advance in equal installments each month. The size of the prebate is determined by the Department of Health & Human Services' poverty level guideline multiplied by the tax rate. This is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. See chart below.
| 2007 Rebate calculation for the 48 contiguous states | |||||||
|---|---|---|---|---|---|---|---|
| One-adult household | Two-adult household | ||||||
| Family size | Anual consumption allowance | Annual rebate | Monthly rebate | Family size | Anual consumption allowance | Annual rebate | Monthly rebate |
| 1 person | $10,210 | $2,348 | $196 | N/A | N/A | N/A | N/A |
| and 1 child | $13,690 | $3,149 | $262 | couple | $20,420 | $4,697 | $391 |
| and 2 children | $17,170 | $3,949 | $329 | and 1 child | $23,900 | $5,497 | $458 |
| and 3 children | $20,650 | $4,750 | $396 | and 2 children | $27,380 | $6,297 | $525 |
| and 4 children | $24,130 | $5,550 | $462 | and 3 children | $30,860 | $7,098 | $591 |
| and 5 children | $27,610 | $6,350 | $529 | and 4 children | $34,340 | $7,898 | $658 |
| and 6 children | $31,090 | $7,151 | $596 | and 5 children | $37,820 | $8,699 | $725 |
| and 7 children | $34,570 | $7,951 | $663 | and 6 children | $41,300 | $9,499 | $792 |
The Hidden Tax
When an employer pays the 7.65% FICA and Medicare taxes for each employee and pays someone to prepare income tax returns and all the other forms for keeping track of tax related items, the employer passes all those costs along to the consumer. Going through all the layers of such income tax related costs, the average hidden tax is 22% inclusive in the cost of each good and service. With the passage of the FairTax, all these hidden taxes disappear.
The National Sales Tax
The FairTax will implement a 23% inclusive national sales tax on all new goods and services at the retail level. However, after removing the 22% (average) hidden tax, the cost of goods and services will remain essentially the same.
No Tax on the Poor
Every American family will receive a check at the beginning of each month to pay all taxes on purchases and services up to the poverty level.