The FairTax is a proposal laid out in The FairTax Act (HR 25, S 1025) that would replace all federal income taxes with a single national retail sales tax. The tax would be levied on all new goods and services for personal consumption at the point of sale. The rate would be set at 23%. You can see their website here.
The current Income Tax is a psychotic legal system.
Inhabitants and businesses of this country spend billions of dollars a year and then spend billions of hours in attempted tax compliance. This just to figure out what they owe or don’t owe in Income taxes.
The Income Tax code itself is made up of 9,834 sections comprising more than 16,845 pages of arbitrary and contradictory laws and opinions.
This plus an additional two-and-a-half million more pages of Income Tax Regulations, Income Tax Revenue Rulings, Income Tax Letter Rulings, Income Tax Memorandums, Income Tax Publications, plus Tax Court, Appeals Court and Supreme Court Opinions. These are all written in an effort to explain and/or argue about the mind-numbing Income Tax laws.
Most personal, financial and business decisions all have to take into account this Income Tax system and generally require expensive assistance from tax accountants and lawyers who all have different opinions on how to apply the Income Tax legal code.
They themselves do not understand many facets of the Income Tax code, the same way most government officials do not understand it (try calling them up and getting a consistent answer to the exact same tax question – good luck on that).
If you are ever the victim of an Income Tax Audit based on the income and deductions you reported on your personal and/or business Income tax return, it could easily cost you thousands upon thousands of dollars to defend yourself if you hire a tax lawyer or tax accountant to defend you.
The Income Tax laws are written so that you are automatically guilty and you must prove your innocence. Thus you have to ‘prove your innocence’ against an Income Tax system that is arbitrary, mind numbing and contradicts itself within its own code.
Every single inhabitant of the country is required by law to keep an accounting of their yearly income and deductions (for the Income Tax) and is required by law to maintain ongoing lifetime balance sheet and net worth calculations (for Estate and Gift taxes)
This accounting is subject to government scrutiny and must be proveable.
So the bureaucracy of this Income Tax system is embedded in every single facet of your life, from the government to the courts to tax lawyers to tax accountants to financial advisers to income tax software companies.
Unless something is done to get rid of this “system”, the current Income Tax scheme is going to continue to wreak financial havoc on the United States economy and its inhabitants.
Good idea in thought. However, how long before the liberal whack jobs up the rate. We could soon be paying 30 to 40 percent so lets think this through.