Fair Tax at a Glance

Fair Tax at a Glance

Fair Tax at a Glance

The fair tax has been proposed to replace income taxes in the United States. The fair tax would be a  progressive tax or a proportional tax.  A  proportional tax is one in which everyone pays the same amount of taxes, as a flat percentage rate , so that no one is taxed unfairly.
The fair tax would be imposed as a consumption tax on all items purchased. Every item purchased, as well as services, would be taxed at the point of purchase and at the same percentage.
The fair tax would also include a rebate to families that have an income that falls below the poverty level. The purpose of the rebate check would be in allowing those families to make purchases tax free or at a reduced rate, because the check would offset those taxes.
The purpose of the fair tax would be to spread the tax burden fairly, across the entire population. Proportional taxes take income into account, including the fact that those with a higher income, would likely spend more on purchases. For instance, a wealthy individual would likely purchase a more expensive vehicle, thereby paying more in taxes.
Advocates of the fair tax claim that since it is a progressive tax, it would tax all individuals equally on purchases, regardless of their income. However, critics state that the wealthy do not necessarily spend more than those with lower salaries and may instead save more money, thereby paying less taxes.




Related Articles

Read previous post:
Understanding Schedule C Tax Deductions