Question

What is your opinion of the Fair Tax as proposed to Congress in 1999 and written about in a book by John Linder in 2005?

Answer 1

Fair Tax was a proposal to reform the federal tax code of the United States. It would have replaced all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales. First introduced into the United States Congress in 1999, a number of congressional committees have heard testimony on the bill; however, it has not moved from committee and has yet to have any effect on the tax system. In 2005, a tax reform movement began to form behind the Fair Tax proposal.

Advantages

Eliminates annual tax preparation headache and costs.

Eliminates IRS.

Boosts income and possibly consumer spending.

Disadvantages

Unfair to seniors who have already paid income taxes.

Needs a new agency to enforce it.

Sales tax rate would be prohibitively high to replace lost revenue.