The FairTax Basics
The FairTax has been called the most thoroughly researched tax reform plan in recent history. This section offers a quick introduction to the FairTax and tax reform.
Scholarly research tells us that . . .
The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars $358 billion more than the taxes it replaces. [1]
The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan. [2]
Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case. [3]
Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10. [4]
The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be. [4]
Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place. [4]
The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted. [4]
By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent. [4]
Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [5]
Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively. [6]
Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax. [7]
Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20. [8]
On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base. [9]
The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent. [10]
References
[1] Bachman, Paul, Jonathan Haughton, Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, and David G. Tuerck, “Taxing Sales under the FairTax: What Rate Works?” published in Tax Notes, November 13, 2006. Click here to read the full paper.
[2] Tuerck, David G., Jonathan Haughton, Paul Bachman, and Alfonso Sanchez-Penalver, “A Comparison of the FairTax Base and Rate with Other National Tax Reform Proposals,” The Beacon Hill Institute at Suffolk University, February 2007. Click here to read the full paper.
[3] Tuerck, David G., Jonathan Haughton, Keshab Bhattarai, Phuong Viet Ngo, and Alfonso Sanchez-Penalver, “The Economic Effects of the FairTax: Results from the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007. Click here to read the full paper.
[4] Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal,” July 2006. Click here to read the full paper.
[5] Kotlikoff, Laurence J. and David Rapson, “Comparing Average and Marginal Tax Rates under the FairTax and the Current System of Federal Taxation,” NBER Working Paper No. 12533, revised October 2006. Click here to read the full paper.
[6] Jokisch, Sabine and Laurence J. Kotlikoff, “Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax,” National Tax Journal, June 2007. Click here to read the full paper.
[7] Tuerck, David G., Jonathan Haughton, Paul Bachman, Alfonso Sanchez-Penalver, and Phuong Viet Ngo, “A Distributional Analysis of Adopting the FairTax: A Comparison of the Current Tax System and the FairTax Plan,” The Beacon Hill Institute at Suffolk University, February 2007. Click here to read the full paper.
[8] Tuerck, David G., Jonathan Haughton, Alfonso Sanchez-Penalver, Sara Dinwoodie, and Paul Bachman, “The FairTax and Charitable Giving,” The Beacon Hill Institute at Suffolk University, February 2007. Click here to read the full paper.
[9] Tuerck, David G., Paul Bachman, and Sylvia Jacob, “Fiscal Federalism: The National FairTax and the States,” The Beacon Hill Institute at Suffolk University, June 2007. Click here to read the full paper.
[10] Walby, Karen, and Dan Mastromarco, “Promoting home ownership: How the FairTax’s benefits for homeowners exceed the mortgage interest deduction,” Americans For Fair Taxation White Paper, August 2006. Click here to read the full paper.
Karen Walby, Ph.D., Director of Research, Americans For Fair Taxation, Jan. 5, 2008.
Saturday, April 17, 2010
Massive Rally in DC:
274,000+ Digital Avatars and 10,000+ People on the Ground Demand Tax Reform
The FairTax sponsored Online Tax Revolt staged a massive TAX DAY 2010 Rally in Washington DC yesterday. More than 10,000 proud Americans from across our great county, congregated in our nation’s capitol to protest our broken, corrupt tax system. FairTax National Victory Campaign/Online Tax Revolt Chairman Ken Hoagland led the rally that featured a diverse group of notable tax reform advocates—including:
Radio Hall of Fame Talk Show Host Neal Boortz
Freedom Works Chairman Dick Armey
Tea Party Express leader Amy Kremer
Americans for Tax Reform President Grover Norquist
United States Senator Saxby Chambliss
Rep. Michele Bachmann
Rep. Steve King
Rep. John Linder
Rep. Jack Kingston
Darla Dawald, National Director of ResistNet a Grassfire Nation Website
More than 274,000 avatars from your FairTax sponsored Online Tax Revolt joined the physical rally of thousands of people on the ground with coverage by all the major networks. If you were watching yesterday, you probably saw our rally on NBC, CBS, ABC, CNN or FOX News. Ken Hoagland was even interviewed by the French and Canadian press. After the rally, Online Tax Revolt broadcast a live TV show about the day’s events. The day started early this morning on the Capitol steps with FairTax volunteers delivering 63,000 Demands for transformational Change to our broken tax system. And the day went on with a Live TV broadcast featuring panel experts on tax reform--Neal Boortz, Amy Kremer, Ryan Ellis with Americans for Tax Reform and Ken Hoagland—discussing the need for tax reform and the incredible events of the day.
The replay of the live broadcast can be seen here.
CSPAN Coverage:
Fairtax In the News
DC TAX PROTEST
Associated Press, YouTube Coverage: (go to YouTube.com, then enter Associated Press Fair Tax Rally - too much coverage for me to present here)
Our Income Tax System -- Corruption on Display
By Ken Hoagland
Fox News
Follow this link to read the full Fox News Article.
Our nation’s tax system caters to powerful schemers with access to Congressional tax writing committees at the top and ignores the just plain dishonest down below. Broken, complicated, corrupted, expensive, destructive and unfair are the words that best describe the federal income tax system after almost a hundred years of being treated like the personal piggy bank of tax lobbyists and members of Congress.
This is not simple pigsty but one that is so complex it cost taxpayers and American businesses more than $300 billion last year in paperwork costs, alone, before a penny of tax was paid. What people owe but don’t pay amounted to more than $350 billion last year—a shortfall that, to make up, increased the average taxpayer’s bill by more than a third.
In Washington, D.C., however, a new American aristocracy made up of political insiders profits richly by buying and selling pieces of the federal tax code. It is routinely used to buy votes and pit Americans against each other, explaining why almost half of the nation does not pay income taxes while the other half carries the entire load. Does such pandering represent the “Achilles Heel” of our Republic and spell inevitable economic ruin?
Our tax system makes members of Congress powerful and tax lobbyists among the richest and most influential in Washington’s elitist ranks. In a nation that threw off the power of pampered aristocrats, they’re back and dining out on our money while the nation staggers under unthinkable and suffocating levels of national debt. Between promises to spend more and more to buy votes and insider deals to sell off more and more of the tax code, We the People are left holding the bag.
Obviously corrupted, our nation’s tax system caters to powerful schemers with access to Congressional tax writing committees at the top and ignores the just plain dishonest down below. More than a trillion dollars a year in America's "underground economy" escapes taxation. Drug dealers, prostitutes and gamblers revel in a taxation dead zone along with at least 10 million illegal immigrants. Millions enjoy the fruits of honest Americans’ labors as their tax dollars go to pay for highways, our nation's defense, schools and every other federal program while they pay no federal income taxes.
In Washington, it’s about Leona Helmsley's advice that “only the little people pay taxes” where Congressional corruption has created a $1.5 billion a year recession-proof tax lobby business. More than 18,000 tax breaks have been written into the code in the last 20 years. This on-going corruption offers promising career paths for staffers and former members of Congress who command seven-figure signing bonuses with private lobbying firms after “public service” in and around our tax writing committees.
They have created a tax system that reaches into and distorts every aspect of American life. Every penny we earn, save or spend must be accounted for to our government. No business decision is made without a tax accountant. We get what is left over after taxes are first taken by government. Insultingly, even death is a taxable event and no new hire is without a tax consequence. Even foreign competitors enjoy a tax advantage over the “Made in America” label but shame for this self-destructive record is hard to find in the Capitol.
Funding the “common good” with our tax dollars includes buying a new fleet of luxury jets for Congress because military transports are not good enough for sensitive Congressional aristocrats. While hiding the cost of government and our taxes from us through payroll taxes and withholding, a spending binge continues out in the open without fear that a reasonable connection between government profligacy and citizen earnings exists in the public mind.
The political class is so confident of this that the idea of a European-style Value Added Tax (aka VAT) has now been arrogantly suggested on top of the income tax. It would further hide the cost of government in retail prices, take more money out of the economy and citizen’s pockets that could be used for jobs and growth but provides the political class with new citizen wealth to advance their own political ambitions and access to perks usually available only to the wealthy. The political elite bank on the idea that most citizens, like modern day serfs, don’t believe they can control a government ironically designed to be directed by the people to serve the best interests of the people.
Our tax system is exhibit number one, for all to see, of what has gone wrong with our government. Fundamental reform ideas ranging from the FairTax, a simple and fair national retail consumption tax to the Flat Tax, Steve Forbes’ idea for far simpler and less expensive tax system require both citizen anger at being so obviously fleeced and the will to take this government back from self-serving aristocrats. That tax rebellion is now under way in the nascent but powerful stirrings of the Online Tax Revolt, which brings together all those Flat Taxers, FairTaxers and Reagan tax cutters who believe that public policy should actually serve the public.
274,000+ Digital Avatars and 10,000+ People on the Ground Demand Tax Reform
The FairTax sponsored Online Tax Revolt staged a massive TAX DAY 2010 Rally in Washington DC yesterday. More than 10,000 proud Americans from across our great county, congregated in our nation’s capitol to protest our broken, corrupt tax system. FairTax National Victory Campaign/Online Tax Revolt Chairman Ken Hoagland led the rally that featured a diverse group of notable tax reform advocates—including:
Radio Hall of Fame Talk Show Host Neal Boortz
Freedom Works Chairman Dick Armey
Tea Party Express leader Amy Kremer
Americans for Tax Reform President Grover Norquist
United States Senator Saxby Chambliss
Rep. Michele Bachmann
Rep. Steve King
Rep. John Linder
Rep. Jack Kingston
Darla Dawald, National Director of ResistNet a Grassfire Nation Website
More than 274,000 avatars from your FairTax sponsored Online Tax Revolt joined the physical rally of thousands of people on the ground with coverage by all the major networks. If you were watching yesterday, you probably saw our rally on NBC, CBS, ABC, CNN or FOX News. Ken Hoagland was even interviewed by the French and Canadian press. After the rally, Online Tax Revolt broadcast a live TV show about the day’s events. The day started early this morning on the Capitol steps with FairTax volunteers delivering 63,000 Demands for transformational Change to our broken tax system. And the day went on with a Live TV broadcast featuring panel experts on tax reform--Neal Boortz, Amy Kremer, Ryan Ellis with Americans for Tax Reform and Ken Hoagland—discussing the need for tax reform and the incredible events of the day.
The replay of the live broadcast can be seen here.
CSPAN Coverage:
Fairtax In the News
DC TAX PROTEST
Associated Press, YouTube Coverage: (go to YouTube.com, then enter Associated Press Fair Tax Rally - too much coverage for me to present here)
Our Income Tax System -- Corruption on Display
By Ken Hoagland
Fox News
Follow this link to read the full Fox News Article.
Our nation’s tax system caters to powerful schemers with access to Congressional tax writing committees at the top and ignores the just plain dishonest down below. Broken, complicated, corrupted, expensive, destructive and unfair are the words that best describe the federal income tax system after almost a hundred years of being treated like the personal piggy bank of tax lobbyists and members of Congress.
This is not simple pigsty but one that is so complex it cost taxpayers and American businesses more than $300 billion last year in paperwork costs, alone, before a penny of tax was paid. What people owe but don’t pay amounted to more than $350 billion last year—a shortfall that, to make up, increased the average taxpayer’s bill by more than a third.
In Washington, D.C., however, a new American aristocracy made up of political insiders profits richly by buying and selling pieces of the federal tax code. It is routinely used to buy votes and pit Americans against each other, explaining why almost half of the nation does not pay income taxes while the other half carries the entire load. Does such pandering represent the “Achilles Heel” of our Republic and spell inevitable economic ruin?
Our tax system makes members of Congress powerful and tax lobbyists among the richest and most influential in Washington’s elitist ranks. In a nation that threw off the power of pampered aristocrats, they’re back and dining out on our money while the nation staggers under unthinkable and suffocating levels of national debt. Between promises to spend more and more to buy votes and insider deals to sell off more and more of the tax code, We the People are left holding the bag.
Obviously corrupted, our nation’s tax system caters to powerful schemers with access to Congressional tax writing committees at the top and ignores the just plain dishonest down below. More than a trillion dollars a year in America's "underground economy" escapes taxation. Drug dealers, prostitutes and gamblers revel in a taxation dead zone along with at least 10 million illegal immigrants. Millions enjoy the fruits of honest Americans’ labors as their tax dollars go to pay for highways, our nation's defense, schools and every other federal program while they pay no federal income taxes.
In Washington, it’s about Leona Helmsley's advice that “only the little people pay taxes” where Congressional corruption has created a $1.5 billion a year recession-proof tax lobby business. More than 18,000 tax breaks have been written into the code in the last 20 years. This on-going corruption offers promising career paths for staffers and former members of Congress who command seven-figure signing bonuses with private lobbying firms after “public service” in and around our tax writing committees.
They have created a tax system that reaches into and distorts every aspect of American life. Every penny we earn, save or spend must be accounted for to our government. No business decision is made without a tax accountant. We get what is left over after taxes are first taken by government. Insultingly, even death is a taxable event and no new hire is without a tax consequence. Even foreign competitors enjoy a tax advantage over the “Made in America” label but shame for this self-destructive record is hard to find in the Capitol.
Funding the “common good” with our tax dollars includes buying a new fleet of luxury jets for Congress because military transports are not good enough for sensitive Congressional aristocrats. While hiding the cost of government and our taxes from us through payroll taxes and withholding, a spending binge continues out in the open without fear that a reasonable connection between government profligacy and citizen earnings exists in the public mind.
The political class is so confident of this that the idea of a European-style Value Added Tax (aka VAT) has now been arrogantly suggested on top of the income tax. It would further hide the cost of government in retail prices, take more money out of the economy and citizen’s pockets that could be used for jobs and growth but provides the political class with new citizen wealth to advance their own political ambitions and access to perks usually available only to the wealthy. The political elite bank on the idea that most citizens, like modern day serfs, don’t believe they can control a government ironically designed to be directed by the people to serve the best interests of the people.
Our tax system is exhibit number one, for all to see, of what has gone wrong with our government. Fundamental reform ideas ranging from the FairTax, a simple and fair national retail consumption tax to the Flat Tax, Steve Forbes’ idea for far simpler and less expensive tax system require both citizen anger at being so obviously fleeced and the will to take this government back from self-serving aristocrats. That tax rebellion is now under way in the nascent but powerful stirrings of the Online Tax Revolt, which brings together all those Flat Taxers, FairTaxers and Reagan tax cutters who believe that public policy should actually serve the public.
Massive Rally in DC:
274,000+ Digital Avatars and 10,000+ People on the Ground Demand Tax Reform
The FairTax sponsored Online Tax Revolt staged a massive TAX DAY 2010 Rally in Washington DC yesterday. More than 10,000 proud Americans from across our great county, congregated in our nation’s capitol to protest our broken, corrupt tax system. FairTax National Victory Campaign/Online Tax Revolt Chairman Ken Hoagland led the rally that featured a diverse group of notable tax reform advocates—including:
- Radio Hall of Fame Talk Show Host Neal Boortz
- Freedom Works Chairman Dick Armey
- Tea Party Express leader Amy Kremer
- Americans for Tax Reform President Grover Norquist
- United States Senator Saxby Chambliss
- Rep. Michele Bachmann
- Rep. Steve King
- Rep. John Linder
- Rep. Jack Kingston
- Darla Dawald, National Director of ResistNet a Grassfire Nation Website
More than 274,000 avatars from your FairTax sponsored Online Tax Revolt joined the physical rally of thousands of people on the ground with coverage by all the major networks. If you were watching yesterday, you probably saw our rally on NBC, CBS, ABC, CNN or FOX News. Ken Hoagland was even interviewed by the French and Canadian press. After the rally, Online Tax Revolt broadcast a live TV show about the day’s events. The day started early this morning on the Capitol steps with FairTax volunteers delivering 63,000 Demands for transformational Change to our broken tax system. And the day went on with a Live TV broadcast featuring panel experts on tax reform--Neal Boortz, Amy Kremer, Ryan Ellis with Americans for Tax Reform and Ken Hoagland—discussing the need for tax reform and the incredible events of the day.
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