FairTax

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Revision as of 21:01, 17 September 2011 by Woozle (talk | contribs) (updates)
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About

FairTax is a bill currently making its way through 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 family size.

Rebate / Family

"Family" is defined as an individual, the individual's legal spouse, any offspring, and any direct ancestors. Although this leaves out unmarried and non-legally-married couples (e.g. gay couples in most states), it's not clear how this affects the actual refund, as each taxpaying individual would still be receiving a rebate, and together those rebates might add up to the same as the combined rebate of a "family".

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.)

Supporters

Supporters of the FairTax include:

Links

Reference