FairTax is a bill proposed in 2007, during the 110th US Congress. It would eliminate the IRS completely, and replace the US federal income tax with a flat sales tax offset by monthly refunds based on basic personal needs (one amount per adult and a much smaller amount per child).
Although the legislation goes into considerable detail to define "family", this appears to be largely irrelevant since the rebate for a married couple is exactly twice the rebate for a single adult.
The rebate is defined in Chapter 3 of the bill as:
- [the flat tax rate (23% for 2009)] x [the monthly poverty level]
The monthly poverty level is defined in Section 303 as:
- (1) the annual level determined by the Department of Health and Human Services poverty guidelines required by sections 652 and 673(2) of the Omnibus Reconciliation Act of 1981 for a particular family size, and
- (2) in case of families that include a married couple, the `annual marriage penalty elimination amount'.
The "marriage penalty elimination amount" presumably being a kluge put in place to offset the notorious "marriage penalty", i.e. the increase in income tax a married couple pays if they file jointly versus if they file separately. (It's not clear why these amounts are different.)
In effect, this seems to translate into a fixed amount per adult (regardless of marital status) and another (much smaller) fixed amount per child.
Supporters of the FairTax include:
- Bob Hall - independent 2012 presidential candidate
- Mike Huckabee - anti-gay fundie and 2008 presidential candidate
- HR25: official text of House bill
- Wikipedia: in-depth article includes explanation of how rebate is calculated
dKosopediano article as of 2008-01-06; confirmed 2012-09-01
- FairTax.org: promotional web site
- FairTax Fraud: argues that FairTax would be a rip-off
- 2012-09-01 Some discussion on Google+