This is just too good to be a government project. That, however, is explained in two ways.
1. It hasn't passed Congress yet and
2. After $22 millions and three years of research by the best economic minds in the country on tax issues; researchers from Harvard, Stanford, Boston University, Rice, MIT and the National Bureau of Economic Research, this is about the most thoroughly researched policy issues ever introduced in Congress.
The bills, now before Congress, areH.R. 25 in the House and S 1493 in the Senate. The Senate bill would repeal the income tax.
A few points that make this FairTax bill MOST interesting are:
It's a national consumption tax instead of income tax, and part goes to shore up social security and Medicare.
FairTax repeals Federal income and social security taxes -- there’s nothing to file. No paperwork -- saves $500 billion in government paperwork alone.
FairTax provides for a monthly rebate to every taxpayer, including valid Social Security cardholders. The amount paid would be equal to the tax paid for essential goods and services, therefore exempting from taxation families living at or below the poverty level.
The FairTax would tax a vast body of people who avoid paying income taxes, like those in the entertainment industry, illegal immigrants, drug dealers and millionaires who use tax loopholes.
Instead of being collected from approximately 180 million working people, FairTax will be collected from 300 million-plus Americans and more than 40 million foreign visitors.
Income taxes currently tax productivity and disproportionately burden the upwardly mobile; FairTax taxes only spending. Savings are tax free.
Things don't cost 23 percent more (the recommended amount for FairTax) because merchants who usually pass the cost of tax along to their customers could cut prices 20percent to 30percent. Research by Professor Jorgenson of Harvard shows that prices will drop by as much as 22 percent on products and 25 percent on services. Say you want to buy something new that costs $10.00. Remove the embedded tax and compliance costs from that item (22 percent) and its pre-FairTax cost is $7.80. Add 23 percent FairTax of $2.30 and the price of that item becomes $10.10. Not so bad.
FairTax is only on new goods. There's no tax on used goods -- used car, home, appliances or on business inputs (something strictly for your business).
American goods become more attractive to foreign markets. US exports wouldn't be burdened with income tax -- selling overseas for 23 percent less, with the same profit margins. Imports would be subject to FairTax. Putting US goods on the same tax basis as imports while lowering export prices gives US companies a pricing advantage.
Sound too good to be true? Check it out at Fair Tax.org. Write your congressreps. We could pass this thing.