FairTax

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About

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).

Family

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.

Rebate

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

Supporters of the FairTax include:

See SourceWatch for a much more complete list. Supporters seem to be overwhelmingly Republican.

Links

Reference

Projects

Notes

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