Explaining the ‘Fair Tax’

Everyone has heard of it, but how many actually know what the “Fair Tax” really is?

Since politicians are discussing their plans for tax reform, this is a good time to mention one of the possibilities.

The Fair Tax is a bill that was introduced in Congress in 1999 with three Democrats and three Republican as co-sponsors.

According to the sponsors, the Fair Tax is a better, more efficient way to collect federal taxes:

• Enables workers to keep their entire paycheck and retirees their entire pension, along with all other income.

• Will offer refunds in advance of the tax on purchases of basic necessities.

• Would ensure that Social Security and Medicare would continue to be funded.

• Expected to close all loopholes and bring fairness to taxation while abolishing the IRS.

The Fair Tax would abolish all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment and corporate taxes, and replace them with one simple, visible federal retail sales tax.

These taxes would be collected by existing state sales tax authorities.