NATIONAL SALES TAX Debate and Poll
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It would eliminate the income tax. All taxes would be collected by retail businesses as they sell goods and services.
There would be no tax forms for citizens to fill out.
It would eliminate the need for the IRS. the Treasury could handle Tax revenues. It would be administered just like current state sales taxes.
IRS officials would STILL be needed to ensure that businesses paid their proper share of sales taxes.
The states administer the sales tax under the NRST (HR2525).
It would tax all citizens at the same rate so that only those who spent more would pay more taxes.
A national sales tax is essentially a tax on consumption. Since low income families spend almost every penny they earn on subsistence items, they would pay A HIGHER PERCENT OF THEIR EARNINGS IN TAXES. HIGHER INCOME families could afford to PUT A portion of their earnings into savings investments.
There is a rebate, based on family size, low income families will in effect pay no tax at all up through the poverty level. In addition, only new things are taxed (not used ones).
It would encourage savings and investment.
It would collect taxes from everyone living in this country, including aliens, illegal aliens, AND THE underground cash economy adding billions of dollars to the nation's treasury.
the CURRENT COST OF tax compliance IS estimated AT $600 billion a year. IT IS estimated THE NATIONAL SALES TAX WILL ONLY COST BUSINESSES $1-5 billion per year.
I'VE HEARD RATES FROM 10 TO 40 PERCENT. WHAT'S THE LIKELY RATE?
Answer 7.1 The FairTax has a tax-inclusive rate of 23%, which is directly comparable to an income tax rate of 23% since income taxes are actually specified on a tax-inclusive basis. This rate applies to new things only - used things are not taxed - and the rebate based on family size also helps lower the effective tax rate.
SINCE BUYING A HOUSE CONSUMES MOST OF THE AVERAGE AMERICANS INCOME, HOW WILL HOUSE PURCHASES BE TAXED?
If the home is used as defined in HR2525, it is not taxed. If new, the 23% tax-inclusive rate applies. Most people would probably just spread this over the life of the mortgage so that it is paid in a monthly amount.
A homeowner who buys an existing home would not pay sales tax on the purchase, but a renter would pay sales tax forever on his rent. (Also, most states tax rental property at higher rates than they tax owner-occupied homes, so a sales tax on top of the "extra" property tax would be heaping more tax on top of an existing unfair tax.) For renters who want to buy a home but are unable to do so, a sales tax applied to rent but not to purchase effects an unconscionable tax penalty for not being able to buy a home, and transfers many
billions of dollars from lower-income renters to higher-income homeowners.
WOULD SOCIAL SECURITY TAXES BE INCLUDED IN THE SALES TAX?
All payroll tax and income tax withholding is removed by the FairTax which means that a person's take home pay is greatly increased and he (or his family) determines how it is to be spent. The money for Social Security, Medicare, etc. is unchanged and is transferred to the appropriate agency from the sales tax revenue. The biggest visible tax most people pay right now are the payroll taxes, and they are highly regressive.