Posted: Apr 26, 2005 By: Cal T. Demier

Comment: Cal T. Demier

I. Description of Proposal . The Fair Tax, http://fairtax.org
• the tax base. Consumption (retail sales only). Repeals income tax Constitutional amendment.
• exemptions, deductions, credits and exclusions . None. Discourages lobbyists corruption of system.
• tax rate(s) . Flat.
• distribution of the tax burden (including provisions for relief for low-income individuals); The rebate ensures no one pays taxes for necessities.
• treatment of charitable giving. No special treatment.
• treatment of home ownership. No special treatment.
• collection method(s) and. Integrated into State Tax collection system where available.
• treatment of businesses. No production taxes so business benefits.
II. Impact of Proposal Relative to Current System .
• simplicity (including transparency and stability). No filing by individuals or non-retail businesses. No complex allowances required to encourage savings and investment.
• fairness. Even those earning money illegally cannot escape a Sale Tax. Encourages legal residency/citizenship by providing a rebate for taxes paid on necessities.
• economic growth and competitiveness. By eliminating production taxes, production in the U.S. becomes more competitive on the global marketplace.
• compliance and administration costs. Much easier to enforce since only retailers need to be policed, not individuals or producers.
III. Transition, Tradeoffs and Special Issues. The transition may be more significant than with other systems but the transparency and predictability of sales tax revenue will make it easer to manage.