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The Fair Tax Act is nonpartisan legislation designed to create a national retail sales tax which replaces all federal income taxes.
This saves approximately 20% of the money that Americans spend on taxes by removing the IRS and making calculating taxes eaiser.
The FairTax is designed to be revenue neutral meaning that it still generates the same amount of tax money for the government.
The sales tax will be a 23% inclusive sales tax.
Currently if you had a 23% income tax, then when you earn $100, the government will take $23.
Under the FairTax if you spent $100, then $23 of that would be the tax.
Everyone! This includes visitors to this country and illegal immigrants! One bonus to the FairTax is that there will no longer be an incentive to remain an illegal immigrant or hire them. Therefore Americans can better compete for jobs.
No, the poor essentially don't pay the FairTax because everyone is reimbursed for spending up to a certain amount. This 'prebate' is determined based upon whether or not someone is married and how many children they have.
No, but because everyone is reimbursed for spending up to a certain amount are the essentials are basically untaxed.
You will recieve your entire paycheck without any money being withheld by the government.
No amazingly prices will barely rise because the embedded tax will be removed. The embedded tax is the tax that the consumer has to pay since companies selling products simply raise the prices of their products and get you to pay their taxes. Currently the embedded tax is approximately 22% of all items you buy.
No the FairTax is revenue neutral meaning the government makes the same amount of money.
Companies will flock to America providing many jobs to Americans because they will no longer have to pay taxes to be American Companies, which ultimately is passed on as an extra tax on all consumers. Currently companies have trouble competing overseas because companies in countries paying less income tax are able to lower their prices.
This is basically just a case of manipulating numbers. The FairTax is a 23% inclusive tax, this means that for every purchase you make 23% of it will be the FairTax. However this means that the FairTax is 30% of the price without the FairTax.
Let me give an example:
If you buy an item for $100 then $23 of that $100 is the FairTax. This means that the price without the FairTax is $77, 30% is gotten by calculated that $23 is 30% of $77.
Either way you do the calculation you end up with the same result. The reason 23% was originally come up with is because the current tax system is inclusive and it is the easiest and fairest way to compare the two systems.
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