Congressman Paul Broun has become the 73rd cosponsor of the Fair Tax legislation, HR25. The Fair Tax Act would replace the complicated and often confusing and counterproductive tax code with a consumption tax, paid at the time of purchase. It has amassed huge support at the grassroots level but faces overwhelming opposition from tax and spend liberals in congress. Indeed the government tracking page for bills gives HR25 only a 1% chance of getting through committee and a 0% chance of becoming law.
Conservatives and Libertarians favor the Fair Tax because it is a direct tax, that people can opt of simply by not buying. It is a progressive tax in that it taxes purchases and the rich make more purchases than the middle class and poor. But it is fairer for the rich because democrats would no longer be able to single them out for tax increases.
The National Taxpayers Union whole heartedly supports the legislation and it's 363,000 members puts some clout behind their request for the Fair Tax. In a letter from 2011, they make their case for the Fair Tax. Since it's original proposal in 1999, the Fair Tax has steadily grown in support. It continues to face incredible opposition from the faar left, who see it as an impediment to raising taxes in order to continue massive spending on pet projects such as Planned Parenthood and PBS.
Under the Fair Tax, corporations who are sitting on an estimated 10 trillion dollars in overseas earnings could repatriate their money to this country without facing confiscatory taxes. Currently, Obama wants these companies to pay a 35% tax to bring the money into the country, whereas the Fair Tax gives them incentives to bring the money home and invest it.
The United States has the highest corporate tax in the world at 39.1% (state and federal combined) and while many on the left like to say that no one really pays that, the fact remains that even with deductions, the average effective rate is 27% compared to the 20% paid by the rest of the world. The higher taxes make our products less attractive overseas.
The Fair Tax would tax all goods and services at the consumer level. Business to business purchases for the purpose of manufacturing goods are not taxed. It replaces all taxes including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.
There is a prebate or an allowable based on the number of people in your household, along with the national poverty level.
Food and medicine are not exempt and the 23% Fair Tax is expected to bring in the same revenue as the other taxes combined. And although 23% sounds high when the prebate is figured in almost everyone will save except for people who consume goods and services above and beyond their income level. And the Fair Tax eliminates the IRS at a savings of over 13 billion a year. And since the money is collected at the point of service or purchase, there is no tax evasion.
Many states have set up grassroots organizations who push for the Fair Tax. They actively seek candidates who favor the Fair Tax and work to get them elected. This explains the steady growth in popularity of the tax.