National Retail Sales Tax Debate

History and Debate of National Retail Sales Tax

Fair Tax is a proposed major change in the tax laws of the United States of America. The plan was conceived by advocacy group Americans for Fair Taxation. Many Americans have heard of this proposed change and wonder what Fair Tax is, the History behind Fair Tax and what affects Fair Tax would have on them and the economy in general.

Fair Tax would first involve repealing many of the current taxes that Americans face including personal and corporate income tax, capital gains tax, payroll tax and gift and estate tax. There would also be a broad consumption tax on retail sales as well as other personal services and property. Nearly everything you purchased or used on a daily basis would be taxed through the Fair Tax program. A few exceptions would be in place; money that citizens save or invest or money they would spend on tuition would not be taxed. The fact that that savings and education is not being taxed makes saving for retirement and investing in education an even better way for Americans to spend their hard earned money.

Fair Tax Introduction

John Linder introduced the Fair Tax Act in the United States House of Representatives each year from 1999 through 2010, and in 2011, Rob Woodall Introduced it. Saxby Chambliss also introduced it several times to the Senate. An interesting fact about this is that each of these Congressmen are Republicans from Georgia. The Act generally receives some support from Republicans, but with a very few exceptions, Democrats have not supported this bill. In fact, President Barack Obama has publicly stated he does not support the bill. The media has given this bill coverage through the years, mainly after talk radio personality Neal Boortz and John Linder wrote a book about the subject in 2005.

The Fair Tax Act is considered by supporters to be a good solution for the tax situation because Americans would be taxed on what they use. A proposed solution to give assistance to those below the poverty level would result in these Americans getting an advance rebate of tax on purchases up to the poverty level. The rate of tax in the proposal is 23% of total spent; however, this would likely be adjusted up or down as the government required. Opponents of the Act feel that the tax burden is being unfairly placed on middle class Americans. Those who do not qualify for the rebate, but do not have extra money for discretionary spending will bear the brunt of this tax, since many upper class Americans do not spend as high of a percentage of their take home pay.

If the Fair Tax program ever goes into effect in the United States, there will certainly be major changes to the way all citizens look at money and what they spend. Time will only tell if the Fair Tax Act ever becomes part of the United States tax policy, but in the meantime, the national retail sales tax debate will rage as to whether this truly is a fair tax program or not.

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For National Retail Sales Tax

Pro
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Against National Retail Sales Tax

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52% of members
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