On Jan. 10, 2023, Rep. Buddy Carter (R-Ga.) introduced H.R. 25, the Fair Tax Act, to replace the current tax code with a national consumption tax known as the FAIRtax. “Each household will receive a monthly prebate based on federal poverty levels and household size that will allow families to purchase necessary goods, such as food, shelter, and medicine, essentially tax-free.
This is similar to our current individual exemption and refundable tax credit system,” said Rep. Carter Reps. Andrew Clyde (R-Ga.), Jeff Duncan (R-S.C.), Kat Cammack (R-Fla.), Scott Perry (R-Pa.), Bob Good (R-Va.), Thomas Massie (R-Ky.), Ralph Norman (R-S.C.), Bill Posey (R-Fla.), Gary Palmer (R-Ala.), Jim Banks (R-In.), and Barry Loudermilk (R-Ga.) joined Rep. Carter as sponsors of the bill.
The beginnings of the Fair Tax originated in the 1990s. In 1995 and 1996, a number of tax reforms attempting to move away from the present income tax were proposed by Republicans.
Steve Forbes promoted the idea of a 17 percent flat tax, and then the first iteration of a fair tax / flat tax bill was introduced in 1999 by Georgia congressman John Linder.
Since then the “FAIRtax” has become the leading tax reform movement in the country. The bill eliminates all personal and corporate income taxes, the death tax, gift taxes, and the payroll tax, and replaces them with a national retail sales tax.
Further, the Fair Tax would eliminate the need for the Internal Revenue Service and the filing of forms and keeping of receipts. Each of taxpayer gets their entire paycheck and the prebate for their family’s size.
Therefore, a taxpayer pays their federal taxes each time there is a purchase of “new” retail goods and retail services.
At the moment, the FAIRtax Act has a good amount of support, but it needs more. Democrats and certain GOP members in Congress are rolling up their sleeves to fight the fight against dismantling our current income tax system. So are special interest groups.
While it’s not surprising that the politicians who oppose the FAIRtax Act may be misguided, or influenced by lobbyists, the irony is that the FAIRtax Act hits tax policy where it matters most, and offers up a worthwhile solution.
