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Source: Wikipedia, the free encyclopedia.

The FairTax is the name given by the authors of a

goods and services for personal consumption. The proposal also calls for a fixed monthly payment to all family households of lawful U.S. residents as an advance rebate, or "prebate", of taxes which would "un-tax" retail spending equivalent to living at the poverty level.[1][2]


--- This should go in tax details ---


--- This should go in a Pros and Cons section --- The plan's supporters believe that a consumption tax would have a positive effect on

state and local bonds
.

Legislative overview and history

Rep John Linder holding the 133 page Fair Tax Act of 2007 in contrast to the then-current U.S. tax code and IRS regulations.

First introduced into the

2008 presidential campaign
.

--- This paragraph duplicates much of the opening article paragraph, need to figure out if we can skip the duplication --- The Fair Tax Act is designed to replace all

Social Security and Medicare taxes), gift taxes, and estate taxes with a national retail sales tax on virtually all new goods and services. The proposal also calls for a fixed monthly payment to all family households of lawful U.S. residents as an advance rebate, or "prebate", of taxes which would "un-tax" retail spending equivalent to living at the poverty level.[1][2] The legislation would remove the Internal Revenue Service (after three years), and establish an Excise Tax Bureau and a Sales Tax Bureau in the Department of the Treasury.[11] The states are granted the primary authority for the collection of sales tax revenues and the remittance of such revenues to the Treasury. The plan was created by Americans For Fair Taxation, an advocacy group formed to change the tax system. The group states that, together with economists, it developed the plan and the name "Fair Tax", based on interviews, polls, and focus groups of the general public.[7] Since the term "fair" is subjective, the name of the plan has been criticized as deceptive marketing by some, while being touted as true to its name by others. The FairTax legislation has been introduced in the House by Georgia Republicans John Linder (1999–2010) and Rob Woodall (2011), while being introduced in the Senate by Georgia Republican Saxby Chambliss
.

Linder first introduced the Fair Tax Act (H.R. 2525) on July 14, 1999 to the

Henry M. Paulson.[21]

To become law, the bill will need to be included in a final version of tax legislation from the

progressive changes
to the income and payroll tax systems.

Tax details

Tax rate and rebate

As defined in the legislation, the tax rate is 23% for the first year. This percentage is based on the total amount paid including the tax ($23 out of every $100 spent in total). This would be equivalent to a 30% traditional U.S. sales tax ($23 on top of every $77 spent—$100 total).[7] The rate would then be automatically adjusted annually based on federal receipts in the previous fiscal year.[27] With the rebate taken into consideration, the FairTax would be progressive on consumption,[2] but would also be regressive on income at higher income levels (as consumption falls as a percentage of income).[8][28] Opponents argue this would accordingly decrease the tax burden on high income earners and increase it on the middle class.[7][22] Supporters contend that the plan would effectively tax wealth, increase purchasing power,[29][30] and decrease tax burdens by broadening the tax base.

Effective tax rate (Individual/Household)

Further information: Distribution of the FairTax burden

The

effective tax rate for any household would be variable due to the fixed monthly tax rebate that are used to "untax" purchases up to the poverty level.[2] The rebate would have the greatest effect at low spending levels, where they could lower a household's effective rate to zero or below.[31] The lowest effective tax rate under the FairTax could be negative due to the rebate for households with annual spending amounts below poverty level spending for a specified household size. At higher spending levels, the rebate has less impact, and a household's effective tax rate would approach 23% of total spending. For example, a household of three persons (this example will use two adults of any gender plus one child - the rebate does not consider marital status) spending $30,000 a year on taxable items would devote about 3.4% of total spending ( [$6,900 tax minus $5,888 rebate]/$30,000 spending ) to the FairTax after the rebate. The same household spending $125,000 on taxable items would spend around 18.3% ( [$28,750 tax minus $5,888 rebate]/$125,000 spending ) on the FairTax.[7] Buying or otherwise receiving items and services not subject to federal taxation (such as a used home or car) can contribute towards a lower effective tax rate. The total amount of spending and the proportion of spending allocated to taxable items would determine a household's effective tax rate on consumption.[31]
If a rate is calculated on income, instead of the tax base, the percentage could exceed the statutory tax rate in a given year.

Tax collection

The tax would be levied once at the final retail sale for personal consumption on new goods and services. A good would be considered "used" and not taxable if a consumer already owns it before the FairTax takes effect or if the FairTax has been paid previously on the good, which may be different than the item being sold previously.

education tuition expenses as they would be considered an investment (rather than final consumption).[32] Personal services such as health care, legal services, financial services, and auto repairs would be subject to the FairTax, as would renting apartments and other real property.[7] In comparison, the current system taxes income prior to purchasing such personal services. State sales taxes generally exempt certain goods and services in an effort to reduce the tax burden on low-income families. The FairTax would use a monthly rebate system instead of the common state exclusions. The FairTax would apply to Internet purchases and would tax retail international purchases (such as a boat or car) that are imported to the United States (collected by the U.S. Customs and Border Protection).[32]

Tax impact

The tax would be levied on all U.S. retail sales for personal consumption on new

budget deficit, unless government spending were equally reduced.[7]


Monthly tax rebate

Proposed 2011 FairTax Prebate Schedule[33]
One adult household Two adult household
Family
Size 		Annual
Consumption
Allowance 		Annual
Prebate 		Monthly
Prebate 		Family
Size 		Annual
Consumption
Allowance 		Annual
Prebate 		Monthly
Prebate
1 person $10,890 $2,505 $209 couple $21,780 $5,009 $417
and 1 child $14,710 $3,383 $282 and 1 child $25,600 $5,888 $491
and 2 children $18,530 $4,262 $355 and 2 children $29,420 $6,767 $564
and 3 children $22,350 $5,141 $428 and 3 children $33,240 $7,645 $637
and 4 children $26,170 $6,019 $502 and 4 children $37,060 $8,524 $710
and 5 children $29,990 $6,898 $575 and 5 children $40,880 $9,402 $784
and 6 children $33,810 $7,776 $648 and 6 children $44,700 $10,281 $857
and 7 children $37,630 $8,655 $721 and 7 children $48,520 $11,160 $930
The annual consumption allowance is based on the 2011 DHHS Poverty Guidelines as published in the Federal Register, January 20, 2011, p. 3638. There is no marriage penalty as the couple gets twice the amount that a single adult receives. For each additional child above 7, add $3,820 to the annual consumption allowance, $878 to the annual rebate, and $73 to the monthly rebate amount. The annual consumption allowance is the amount of spending that is "untaxed" under the FairTax. Note: Alaska and Hawaii have different poverty levels and would have different FairTax rebate amounts.

Under the FairTax,

U.S. Department of Health and Human Services.[1] The FCA is a tax rebate (known as a "prebate" as it would be an advance) paid in twelve monthly installments, adjusted for inflation. The rebate is meant to eliminate the taxation of household necessities and make the plan progressive.[7] Households would register once a year with their sales tax administering authority, providing the names and social security numbers of each household member.[1] The Social Security Administration would disburse the monthly rebate payments in the form of a paper check via U.S. Mail, an electronic funds transfer to a bank account, or a "smartcard" that can be used like a debit card.[1]

Opponents of the plan criticize this tax rebate due to its costs. Economists at the

welfare payment regardless of need.[36]

The

Joint Committee on Taxation.[34] They argue this is $456 billion more than the FairTax "entitlement" (tax refund) would spend to cover each person's tax expenses up to the poverty level. In addition, it was estimated for 2005 that the Internal Revenue Service was already sending out $270 billion in refund checks.[34]

Presentation of tax rate

Mathematically, a 23% tax out of $100 yields the same as a 30% tax on $77.

Sales and income taxes behave differently due to differing definitions of tax base, which can make comparisons between the two confusing. Under the existing individual income plus employment (Social Security; Medicare; Medicaid) tax formula, taxes to be paid are included in the base on which the tax rate is imposed (known as

tax-exclusive
). A good priced at $77 with a 30% sales tax rate yields $23 in taxes owed. To adjust an inclusive rate to an exclusive rate, divide the given rate by one minus that rate (i.e. ).

The FairTax

FactCheck called the presentation misleading, saying that it hides the real truth of the tax rate.[40]. FairTax proponents counter that those opponents use that difference just as deceptively in an attempt to make the FairTax rate look "higher than current taxes," when in fact the rate is calculated to generate approximately identical revenues. Bruce Bartlett stated that polls show tax reform support is extremely sensitive to the proposed rate,[36] and called the presentation confusing and deceptive based on the conventional method of calculating sales taxes.[41]
Proponents believe it is both inaccurate and misleading to say that an income tax is 23% and the FairTax is 30% as it implies that the sales tax burden is higher.

Revenue neutrality

Main article: Revenue neutrality of the FairTax

A key question surrounding the FairTax is whether the tax has the ability to be revenue-neutral; that is, whether the tax would result in an increase or reduction in overall federal tax revenues. Economists, advisory groups, and political advocacy groups disagree about the tax rate required for the FairTax to be truly revenue-neutral. Various analysts use different assumptions, time-frames, and methods resulting in dramatically different

tax rates making direct comparison among the studies difficult. The choice between static or dynamic scoring further complicates any estimate of revenue-neutral rates.[42]

A 2006 study published in

U.S. government debt.[43] Nor did these studies account for any increased economic growth that many economists researching the plan believe would occur.[43][46][47][48]

In contrast to the above studies,

President's Advisory Panel for Federal Tax Reform performed a 2006 analysis to replace the individual and corporate income tax with a retail sales tax and estimated the rate to be 25% (34% tax-exclusive) assuming 15% tax evasion, and 33% (49% tax-exclusive) with 30% tax evasion.[22] The rate would need to be substantially higher to replace the additional taxes replaced by the FairTax (payroll, estate, and gift taxes). Several economists criticized the President's Advisory Panel's study as having allegedly altered the terms of the FairTax, using unsound methodology, and/or failing to fully explain their calculations.[34][43][51]

Distribution of tax burden

Main article: Distribution of the FairTax burden
Boston University study of the FairTax. Lower rates claimed on workers from a larger tax base, replacing regressive taxes, and wealth taxation.
President's Advisory Panel's
analysis of a hybrid National Sales Tax. Higher rates claimed on the middle-class for an income tax replacement (excludes payroll, estate, and gift taxes replaced under the FairTax).

The FairTax's effect on the distribution of taxation or tax incidence (the effect on the distribution of economic welfare) is a point of dispute. The plan's supporters argue that the tax would broaden the tax base, that it would be progressive, and that it would decrease tax burdens and start taxing wealth (reducing the economic gap).[29][52] Opponents argue that a national sales tax would be inherently regressive and would decrease tax burdens paid by high-income individuals.[7][53] Households at the lower end of the income scale spend almost all their income, while households at the higher end are more likely to devote a portion of income to saving; households at the extreme high end of consumption often finance their purchases out of savings, not income.[8][36] Income earned and saved would not be taxed until spent under the proposal.

Under the initial rate, a family of four (a couple with two children) earning $25,000 and spending this on taxable goods and services would consume 100% of their income. A higher income family of four making $100,000, spending $75,000 and saving $25,000, would devote 75% of their income for the year on taxable goods and services. Therefore, according to economist William G. Gale, the percentage of income taxed is regressive.[8] However, including the rebate specified in HR25 yields a different picture. In this example, the couple with the $25,000 income would actually receive $1,016 more in rebate then they spent in taxes ($5,750 tax minus $6,767 rebate), while the couple earning $100,000 would spend $10,483 in taxes ($17,250 tax minus $6,767 rebate). When presented with an estimated effective tax rate, the low-income family above would pay a tax rate of -4.06% on the 100% of consumption (-$1,016/$25,000), whereas the higher income family would pay a tax rate of 13.9% on the 75% of consumption ($10,483/$75,000, with the other 25% untaxed until spent).[31] Thus, according to economist Laurence Kotlikoff, the effective tax rate is progressive on consumption.[2] A person spending at the poverty level would have an effective tax rate of 0%, whereas someone spending at four times the poverty level would have an effective tax rate on consumption of 17.2%.[31]

Kotlikoff states that the FairTax could make the tax system much more progressive and generationally equitable,

wages plus taxing wealth.[2] Studies by Kotlikoff and Daivd Rapson state that the FairTax would significantly reduce marginal taxes on work and saving, lowering overall average remaining lifetime tax burdens on current and future workers.[29][54] A study by Kotlikoff and Sabine Jokisch concluded that the long term effects of the FairTax would reward low-income households with 26.3% more purchasing power, middle-income households with 12.4% more purchasing power, and high-income households with 5% more purchasing power.[30] The Beacon Hill Institute reported that the FairTax would make the federal tax system more progressive and would benefit the average individual in almost all expenditures deciles.[28] In another study, they state the FairTax would offer the broadest tax base (an increase of over $2 trillion), which allows the FairTax to have a lower tax rate than current tax law.[55]

Gale analyzed a national sales tax (though different from the FairTax in several aspects

payroll tax (a 15.3% total tax not included in the Tax Panel study;[22] payroll taxes include a 12.4% Social Security tax on wages up to $97,500 and a 2.9% Medicare tax, a 15.3% total tax that is often split between employee and employer) greatly changes the tax distribution, and that the FairTax would relieve the tax burden on middle-class workers.[2][51]

Predicted effects

Main article: Predicted effects of the FairTax

The predicted effects of the FairTax are a source of disagreement among economists and other analysts.

home ownership and charitable contributions.[57] There is also concern about the effect on the income tax industry and the difficulty of repealing the Sixteenth Amendment (to prevent Congress from re-introducing an income tax).[58]

Economic

For more details on this topic, see Predicted effects of the FairTax: Economic effects

Americans For Fair Taxation states the FairTax would boost the United States economy and offers a letter signed by eighty economists, including

macroeconomic improvement in both the short and long-term, but warned of transitional issues.[50]

FairTax proponents argue that the proposal would provide tax burden visibility and reduce compliance and efficiency costs by 90%, returning a large share of money to the productive economy.

House Ways and Means Committee, asked Princeton University Econometrics to survey 500 European and Asian companies regarding the effect on their business decisions if the United States enacted the FairTax. 400 of those companies stated they would build their next plant in the United States, and 100 companies said they would move their corporate headquarters to the United States.[61] Supporters argue that the U.S. has the highest combined statutory corporate income tax rate among OECD countries along with being the only country with no border adjustment element in its tax system.[62][63] Proponents state that because the FairTax eliminates corporate income taxes and is automatically border adjustable, the competitive tax advantage of foreign producers would be eliminated, immediately boosting U.S. competitiveness overseas and at home.[64]

Opponents point to a study commissioned by the

supply-side effects and would create a powerful disincentive to spend money.[53] John Linder states an estimated $11 trillion is held in foreign accounts (largely for tax purposes), which he states would be repatriated back to U.S. banks if the FairTax were enacted, becoming available to U.S. capital markets, bringing down interest rates, and otherwise promoting economic growth in the United States.[3] Attorney Allen Buckley states that a tremendous amount of wealth was already repatriated under law changes in 2004 and 2005.[66] Buckley also argues that if the tax rate was significantly higher, the FairTax would discourage the consumption of new goods and hurt economic growth.[66]

Transition

For more details on this topic, see Predicted effects of the FairTax: Transition effects
Adjusted Gross Income
.

During the transition, many or most of the employees of the IRS (105,978 in 2005)[67] would face loss of employment.[43] The Beacon Hill Institute estimate is that the federal government would be able to cut $8 billion from the IRS budget of $11.01 billion (in 2007), reducing the size of federal tax administration by 73%.[43] In addition, income tax preparers (many seasonal), tax lawyers, tax compliance staff in medium-to-large businesses, and software companies which sell tax preparation software could face significant drops, changes, or loss of employment. The bill would maintain the IRS for three years after implementation before completely decommissioning the agency, providing employees time to find other employment.[11]

In the period before the FairTax is implemented, there could be a strong incentive for individuals to buy goods without the sales tax using credit. After the FairTax is in effect, the credit could be paid off using untaxed payroll. If credit incentives do not change, opponents of the FairTax worry it could exacerbate an existing consumer debt problem.[68] Proponents of the FairTax state that this effect could also allow individuals to pay off their existing (pre-FairTax) debt more quickly,[3] and studies suggest lower interest rates after FairTax passage.[59]

Individuals under the current system who accumulated savings from ordinary income (by choosing not to spend their money when the income was earned) paid taxes on that income before it was placed in savings (such as a Roth IRA or CD). When individuals spend above the poverty level with money saved under the current system, that spending would be subject to the FairTax. People living through the transition may find both their earnings and their spending taxed.[69] Critics have stated that the FairTax would result in unfair double taxation for savers and suggest it does not address the transition effect on some taxpayers who have accumulated significant savings from after-tax dollars, especially retirees who have finished their careers and switched to spending down their life savings.[37][69] Supporters of the plan argue that the current system is no different, since compliance costs and "hidden taxes" embedded in the prices of goods and services cause savings to be "taxed" a second time already when spent.[69] The rebate would supplement accrued savings, covering taxes up to the poverty level. The income taxes on capital gains, estates, social security and pension benefits would be eliminated under FairTax. In addition, the FairTax legislation adjusts Social Security benefits for changes in the price level, so a percentage increase in prices would result in an equal percentage increase to Social Security income.[11] Supporters suggest these changes would offset paying the FairTax under transition conditions.[3]

Other indirect effects

For more details on this topic, see Predicted effects of the FairTax: Other indirect effects

The FairTax would be tax free on mortgage interest up to the

burden of proof, and due process.[6][74]

If the FairTax bill were passed, permanent elimination of income taxation would not be guaranteed; the FairTax bill would repeal much of the existing

unconstitutional.[66]

Changes in the retail economy

See also: Tax: Economics of taxation, Effect of taxes and subsidies on price

Since the FairTax would not tax used goods, the value would be determined by the supply and demand in relation to new goods.[76] The price differential/margins between used and new goods would stay consistent, as the cost and value of used goods are in direct relationship to the cost and value of the new goods. Because the U.S. tax system has a hidden effect on prices, it is expected that moving to the FairTax would decrease production costs from the removal of business taxes and compliance costs, which is predicted to offset a portion of the FairTax effect on prices.[3]

Value of used goods

Since the FairTax would not tax used goods, some critics have argued that this would create a differential between the price of new and used goods, which may take years to equalize.[36] Such a differential would certainly influence the sale of new goods like vehicles and homes. Similarly, some supporters have claimed that this would create an incentive to buy used goods, creating environmental benefits of re-use and re-sale.[73] Conversely, it is argued that like the income tax system that contains embedded tax cost (see Theories of retail pricing),[77] used goods would contain the embedded FairTax cost.[69] While the FairTax would not be applied to the retail sales of used goods, the inherent value of a used good includes the taxes paid when the good was sold at retail. The value is determined by the supply and demand in relation to new goods.[76] The price differential / margins between used and new goods should stay consistent, as the cost and value of used goods are in direct relationship to the cost and value of the new goods.

Theories of retail pricing

A supply and demand diagram illustrating taxes' effect on prices.

Based on a study conducted by

Federal Reserve monetary authorities.[21][36][80] Non-accommodation of the money supply would suggest retail prices and take home pay stay the same—embedded taxes are replaced by the FairTax. Full accommodation would suggest prices and incomes rise by the exclusive rate (i.e. 30%)—embedded taxes become windfall gains. Partial accommodation would suggest a varying degree in-between.[21][80]

If businesses provided employees with gross pay (including income tax withholding and the employee share of payroll taxes),[43] Arduin, Laffer & Moore Econometrics estimated production costs could decrease by a minimum of 11.55% (partial accommodation).[46] This reduction would be from the removal of the remaining embedded costs, including corporate taxes, compliance costs, and the employer share of payroll taxes. This decrease would offset a portion of the FairTax amount reflected in retail prices, which proponents suggest as the most likely scenario.[21] Bruce Bartlett states that it is unlikely that nominal wages would be reduced, which he believes would result in a recession, but that the Federal Reserve would likely increase the money supply to accommodate price increases.[36] David Tuerck states "The monetary authorities would have to consider how the degree of accommodation, varying from none to full, would affect the overall economy and how it would affect the well-being of various groups such as retirees."[80]

Social Security benefits would be adjusted for any price changes due to FairTax implementation.[11] The Beacon Hill Institute states that it would not matter, apart from transition issues, whether prices fall or rise—the relative tax burden and tax rate remains the same.[43] Decreases in production cost would not fully apply to imported products; so according to proponents, it would provide tax advantages for domestic production and increase U.S. competitiveness in global trade (see Border adjustability). To ease the transition, U.S. retailers will receive a tax credit equal to the FairTax on their inventory to allow for quick cost reduction. Retailers would also receive an administrative fee equal to the greater of $200 or 0.25% of the remitted tax as compensation for compliance costs,[81] which amounts to around $5 billion.

Effects on tax code compliance

One avenue for non-compliance is the black market. FairTax supporters state that the

drug dealers would be guilty of failing to submit sales tax), but they would face taxation when they used drug proceeds to buy consumer goods such as food, clothing, and cars. By taxing this previously untaxed money, FairTax supporters argue that non-filers would be paying part of their share of what would otherwise be uncollected income and payroll taxes.[3][85]

Other economists and analysts have argued that the underground economy would continue to bear the same tax burden as before.[5][84][85][86] They state that replacing the current tax system with a consumption tax would not change the tax revenue generated from the underground economy—while illicit income is not taxed directly, spending of income from illicit activity results in business income and wages that are taxed.[5][84][85]

Tax compliance and evasion

"No, No! Not That Way"—Political cartoon from 1933 commenting on a general sales tax over an income tax.

Proponents state the FairTax would reduce the number of tax filers by about 86% (from 100 million to 14 million) and reduce the filing complexity to a simplified state sales tax form.[51] The Economist reported on empirical research that supports the claim that simplified tax systems lead to greater compliance.[87] The Government Accountability Office (GAO), among others, have specifically identified the negative relationship between compliance costs and the number of focal points for collection.[88] Under the FairTax, the federal government would be able to concentrate tax enforcement efforts on a single tax. Retailers would receive an administrative fee equal to the greater of $200 or 0.25% of the remitted tax as compensation for compliance costs.[81] In addition, supporters state that the overwhelming majority of purchases occur in major retail outlets, which are very unlikely to evade the FairTax and risk losing their business licenses.[43] Economic Census figures for 2002 show that 48.5% of merchandise sales are made by just 688 businesses ("Big-Box" retailers). 85.7% of all retail sales are made by 92,334 businesses, which is 3.6% of American companies. In the service sector, approximately 80% of sales are made by 1.2% of U.S. businesses.[21]

The FairTax is a national tax, but can be administered by the states rather than a federal agency,

information sharing, and clear interstate revenue allocation rules.[88][89] A study by the Beacon Hill Institute concluded that, on average, states could more than halve their sales tax rates and that state economies would benefit greatly from adopting a state-level FairTax.[88]

FairTax opponents state that compliance decreases when taxes are not

Organisation for Economic Co-operation and Development (OECD), IMF, and Brookings Institution have suggested that the upper limit for a sales tax is about 10% before incentives for evasion become too great to control.[36] According to the GAO, 80% of state tax officials opposed a national sales tax as an intrusion on their tax base.[36] Opponents also raise concerns of legal tax avoidance by spending and consuming outside of the U.S. (imported goods would be subject to collection by the U.S. Customs and Border Protection).[91]

Economists from the

President's Advisory Panel for Federal Tax Reform reported that if the federal government were to cease taxing income, states might choose to shift their revenue-raising to income.[22] Absent the Internal Revenue Service, it would be more difficult for the states to maintain viable income tax systems.[22][92]

Underground economy

Opponents of the FairTax argue that imposing a national retail sales tax would drive transactions underground and create a vast

underground economy.[7] Under a retail sales tax system, the purchase of intermediate goods and services that are factors of production are not taxed, since those goods would produce a final retail good that would be taxed. Individuals and businesses may be able to manipulate the tax system by claiming that purchases are for intermediate goods, when in fact they are final purchases that should be taxed. Proponents point out that a business is required to have a registered seller's certificate on file, and must keep complete records of all transactions for six years. Businesses must also record all taxable goods bought for seven years. They are required to report these sales every month (see Personal vs. business purchases).[39] The government could also stipulate that all retail sellers provide buyers with a written receipt, regardless of transaction type (cash, credit, etc.), which would create a paper trail for evasion with risk of having the buyer turn them in (the FairTax authorizes a reward for reporting tax cheats).[51]

While many economists and tax experts support a consumption tax, problems could arise with using a retail sales tax rather than a

1099-type forms, their sales to other firms, which would provide the same records that arise under a VAT.[51]
In the United States, a general sales tax is imposed in 45 states plus the District of Columbia (accounting for over 97% of both population and economic output), which proponents argue provides a large infrastructure for taxing sales that many countries do not have.

Personal versus business purchases

Businesses would be required to submit monthly or quarterly reports (depending on sales volume) of taxable sales and sales tax collected on their monthly sales tax return. During

non-profit or religious organization "for business purposes" would not be taxable.[94]

FairTax movement

A FairTax rally in Orlando, Florida on July 28, 2006.

The creation of the FairTax began with a group of businessmen from Houston, Texas, who initially financed what has become the political advocacy group Americans For Fair Taxation (AFFT), which has grown into a large tax reform movement.[10][21] This organization, founded in 1994, claims to have spent over $20 million in research, marketing, lobbying, and organizing efforts over a ten year period and is seeking to raise over $100 million more to promote the plan.[95] AFFT includes a staff in Houston and a large group of volunteers who are working to get the FairTax enacted. Bruce Bartlett has charged that the FairTax was devised by the Church of Scientology in the early 1990s.[41] Representative John Linder told the Atlanta Journal-Constitution that Bartlett confused the FairTax movement with the Scientology-affiliated Citizens for an Alternative Tax System,[96] which also seeks to abolish the federal income tax and replace it with a national retail sales tax. Leo Linbeck, AFFT Chairman and CEO, stated "As a founder of Americans For Fair Taxation, I can state categorically, however, that Scientology played no role in the founding, research or crafting of the legislation giving expression to the FairTax."[95]

Much support has been achieved by talk radio personality

electronic mailing lists have contributed to promoting, organizing, and gaining support for the FairTax. In the 2012 Republican presidential primary, former Governor of New Mexico and businessman Gary Johnson has been actively campaigning for the FairTax.[100]. Former CEO of Godfather's Pizza Herman Cain has been promoting the FairTax as a final step in a multiple-phase tax reform.[101]

See also

Notes

  1. ^ a b c d e f Fair Tax Act, 2009, Chapter 3
  2. ^ a b c d e f g h i Kotlikoff, 2005
  3. ^ a b c d e f g h i j The FairTax Book
  4. ^ a b c Open Letter to the President
  5. ^ a b c d Auerbach, 2005
  6. ^ a b Sipos, 2007
  7. ^ a b c d e f g h i j k l m n o Regnier, 2005
  8. ^ a b c d e Gale, 1998
  9. ^ a b Gale, 2005
  10. ^ a b Linbeck statement, 2005
  11. ^ a b c d Fair Tax Act, 2009, Title III
  12. ^ a b H.R.25 108th Cosponsors
  13. ^ a b S.1493 108th Cosponsors
  14. ^ a b H.R.25 109th Cosponsors
  15. ^ a b S.25 109th Cosponsors
  16. ^ a b c H.R.25 110th Cosponsors
  17. ^ S.1025 110th Cosponsors
  18. ^ H.R.25 111th Cosponsors
  19. ^ S.296 111th Cosponsors
  20. ^ Bender, 2005
  21. ^ a b c d e f g Boortz and Linder, 2008
  22. ^ a b c d e f g h i j k Tax Reform Panel Report, Ch. 9
  23. ^ a b Davis, 2007
  24. ^ CBS News, 2007
  25. ^ Rasmussen Reports, 2009
  26. ^ Obama, 2008
  27. ^ Fair Tax Act, 2009, Chapter 1
  28. ^ a b c Tuerk et al., 2007
  29. ^ a b c Kotlikoff and Rapson, 2006
  30. ^ a b c Kotlikoff and Jokisch, 2007
  31. ^ a b c d Walby, 2005
  32. ^ a b Fair Tax Act, 2009
  33. ^ 2011 prebate
  34. ^ a b c d e Rebuttal to Tax Panel Report, 2006
  35. ^ Bartlett, 2007
  36. ^ a b c d e f g h i j k Bartlett, 2007, Tax Notes
  37. ^ a b c d Yin, 2006, Fla. L. Rev.
  38. ^ Linder and Boortz, 2007
  39. ^ a b c d e Fair Tax Act, 2009, Chapter 5
  40. ^ a b Miller, 2007
  41. ^ a b c d Bartlett, 2007, Wall Street Journal
  42. ^ Gingrich and Ferrara, 2005
  43. ^ a b c d e f g h i j k Bachman et al., 2006
  44. ^ a b Burton and Mastromarco, 1998
  45. ^ Burton and Mastromarco, 1998a
  46. ^ a b c d Arduin, Laffer & Moore Econometrics, 2006
  47. ^ Altig et al., 2001
  48. ^ a b c Tuerk et al., 2007
  49. ^ Esenwein, 2005
  50. ^ a b c Diamond and Zodrow, 2008
  51. ^ a b c d e f Kotlikoff, 2008
  52. ^ Tamny, 2009
  53. ^ a b c Taranto, 2007
  54. ^ Kotlikoff and Rapson, 2006
  55. ^ Tuerk et al., 2007
  56. ^ Zodrow and McClure, 2006
  57. ^ Giuliani, 2007
  58. ^ a b Vance, 2005
  59. ^ a b Golob, 1995
  60. ^ Tuerk et al., 2007
  61. ^ Gaver, 2006
  62. ^ Hodge and Atkins, 2005
  63. ^ Linbeck, 2006a
  64. ^ Linbeck, 2007
  65. ^ Vargas, 2005
  66. ^ a b c Buckley, 2008
  67. ^ IRS Labor Force, 2005
  68. ^ Household Debt, 2006
  69. ^ a b c d Taranto, 2007a
  70. ^ Fair Tax Act, 2009, Chapter 8
  71. ^ Tuerck et al., 2007
  72. ^ Types of Bonds
  73. ^ a b c Gravel, 2007
  74. ^ Edwards, 2002
  75. ^ Fair Tax Act, 2009, Title IV
  76. ^ a b Landsburg, 1998
  77. ^ Forbes, 2007
  78. ^ Jorgenson, 1998
  79. ^ Boortz, 2005
  80. ^ a b c Tuerck, 2008
  81. ^ a b Fair Tax Act, 2009, Chapter 2
  82. ^ McTague, 2005
  83. ^ Schlosser, 2004
  84. ^ a b c Taranto, 2007
  85. ^ a b c d American Enterprise Institute, 2007
  86. ^ Moffatt, 2006
  87. ^ The Economist, 2005
  88. ^ a b c Tuerck at el, 2007
  89. ^ a b Fair Tax Act, 2009, Chapter 4
  90. ^ California Legislative Analyst's Office
  91. ^ Karvounis, 2007
  92. ^ a b Fox and Murray, 2005
  93. ^ Slemrod, 2005
  94. ^ Fair Tax Act, 2009, Chapter 7
  95. ^ a b Linbeck, 2007
  96. ^ Galloway, 2007
  97. ^ a b Boortz, 2005
  98. ^ Boortz, 2006
  99. ^ Politico, 2010
  100. ^ Gary Johnson 2012 Campaign Site, 2011
  101. ^ RedState, 2011

References

Further reading

External links

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