The FAIRtax Is Progressive
One of the most frequent criticisms of a national sales tax is that it would be regressive. Lower-income families generally must spend a larger share of their available resources on necessities, while higher-income households have greater ability to save. If every household simply paid the same sales-tax rate on every dollar it spent, that criticism would have considerable force.
Here is a chart illustrating this.
Here is an example of a progressive tax.
Unlike the sales taxes people are familiar with today, the FAIRtax has a special provision that makes it progressive in its application. That provision is the Family Consumption Allowance.
Strictly speaking, the Family Consumption Allowance is the amount of money a household is allowed to spend tax free. Think of it as a standard deduction. It is not income based. It’s based strictly on federal poverty levels by household size, and it’s automatically updated every year.
The FAIRtax prebate is calculated as 23% of the Family Consumption Allowance. The prebate is a payment sent to every legal household that completely reimburses that household for the FAIRtax paid at the cash register on spending up to the Family Consumption Allowance. The effect is that spending up to the Family Consumption Allowance is completely tax free.
A family does not take a dime out of its own pocket to pay the FAIRtax until their spending exceeds their Family Consumption Allowance.
Here is a chart illustrating this.
The prebate changes the effective FAIRtax rate so that households spending at or near the poverty level pay little or no net federal consumption tax, while the effective rate rises as spending increases. That is what makes the FAIRtax progressive with respect to consumption.
Under the FAIRtax, the government does not decide that one person’s purchase is a necessity while another person’s is a luxury. Everyone pays the same statutory rate when purchasing taxable new goods and services, but every qualifying household has a Family Consumption Allowance based on family size.
The result is straightforward: the family struggling to meet basic living expenses pays no net FAIRtax on poverty-level consumption, the middle-income family pays a moderate effective rate, and the household engaging in much greater consumption pays an increasingly higher effective rate.
That is why the prebate is much more than just a rebate check. It is the mechanism that transforms a uniform retail consumption tax into a progressive system of effective tax rates.
The FAIRtax taxes consumption, but the Family Consumption Allowance protects basic consumption first. As spending rises, so does the percentage of spending actually paid in federal tax.
That progressive structure is one of the central reasons the FAIRtax can replace the existing income and payroll tax system without placing the greatest relative burden on families least able to afford it.
CONCLUSION
The FAIRtax repeals federal individual and corporate income taxes and federal payroll taxes and replaces them with a transparent national retail consumption tax. The legislation expressly provides for repeal of both the income tax and payroll taxes.
Isn’t it time that we have a federal tax system that rewards things that benefit society?
People are upset with our present income/payroll tax system because it benefits only a small percentage of the population—the very wealthy and Members of Congress who fund their re-election campaigns by selling favorable tax treatment to the highest bidder.
For the rest of us, it’s an expensive, intrusive, incomprehensible mess that none of us fully understands.
THE FAIRTAX IS THE ANSWER.
The FAIRtax Act (H.R. 25) is more than just a proposal for a retail sales tax; it is a fundamental restructuring of the federal fiscal structure. Unlike other excise taxes which normally are applied to specific products and in different percentage amounts, the FAIRtax applies a 23% rate to all new retail products and retail services.
The FAIRtax is a national retail sales tax on new retail goods and retail services which provides a family credit so that all purchases up to the poverty level for each family are not taxed. There is no withholding from your paycheck, and YOU NEVER HAVE TO FILE A TAX RETURN TELLING THE GOVERNMENT HOW MUCH YOU EARNED AND HOW MUCH YOU SPENT, AND YOU’LL NEVER BE HARASSED BY THE IRS EVER AGAIN.
Many of you have labored tirelessly for freedom from the federal income tax and the IRS. You deserve a great deal of credit for your efforts to educate the American people on the need to fund the American government in a way that is good for America and returns freedom to the American people.
It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite. We must let Congress and the President know that the best way to replace the income tax and the IRS is with the FAIRtax.
Make no mistake about it. The FAIRtax is a grave threat to the Ruling Elites. It will strip them of their power and their ability to control us though the tax system. Their opposition to the FAIRtax will be fierce and unrelenting. And don’t think for an instant that they won’t use half-truths, deception and downright lies in their desperate attempt to hang on to their power.
However, with the support of this President, we can finally eliminate the income tax and the IRS!!!
Of course, the best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16th Amendment as well so no future administration can ever shackle the American people with an income tax again.
We must come together and ensure that real tax reform, the FAIRtax, is not subverted by the Elites in D.C.
This will take the diligent efforts of all of us. We need your financial assistance, and we need your grass roots assistance.
If you have contacts that will allow us to get more information to President Trump about the FAIRtax please let us know.
Please email us at info@FAIRtax.org and we will give you some options on how you can best help us.
At a minimum, please call your Congressional representative and ask if he or she supports the FAIRtax. If so, thank him/her for their support and suggest they become a cosponsor of HR-25 if they’re not one already. If not, ask why not. If your representative claims to be unfamiliar with the FAIRtax, offer to have someone come to their office and explain it to them.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.
THE SOLUTION—PASS THE FAIRTAX!
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.