The FairTax® Plan

The current federal income tax system is clearly broken -- unfair, overly complex, and almost impossible for most Americans to understand. But there is a reasonable, nonpartisan alternative that is both fair and easy to understand. A system that allows you to keep your whole paycheck and only pay taxes on what you spend.

The FairTax® is a national sales tax that treats every person equally and allows American businesses to thrive, while generating the same tax revenue as the current four-million-word-plus word tax code. Under the FairTax® every person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities through a Family Consumption Allowance (FCA). At the retail counter, the FairTax® rate is 23% and equal to the lowest current income tax bracket (15%) combined with employee payroll taxes (7.65%), both of which will be eliminated.  However, to ensure that necessities of life aren't taxed, every American can receive the FCA, which offsets the FairTax® up to and beyond household poverty levels as determined each year by the Department of Health and Human Services.  As a result, every legal household spending twice the poverty level in a given year will realize an effective tax rate of only 11.5%.  A household would have to spend over $14,000,000 before approaching the full effective tax rate of 23%.

There are many more benefits to repealing the income tax and replacing it with the FairTax®.  They can be found within the resources, news and video pages on this site, plus www.fairtax.org and www.FairTaxNation.com.

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