BHI on the FairTax (2007)
As specified in Congressional bill H.R. 25/S. 25 (2006), the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Previous studies suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. But according to the Beacon Hill Institute, a 23% rate is eminently feasible and suggests why others reached the opposite conclusion. In addition to determining the FairTax rate, BHI has also studied its effects on the economy at large and charitable giving and tax equity.
Read More Below:
A Comparison of the FairTax Base and Rate with Other Tax Reform Proposals
The Economic Effects of the FairTax: Results from the BHI CGE Model
The FairTax and Charitable Giving
Tax Administration and Collection Costs: The FairTax vs. the Existing Federal Tax System
Fiscal Federalism: The National FairTax and the States
See also Tax Notes Reprint November 2006
Taxing Sales Under the FairTax: What Rate Works? Complete Study (PDF)
Response to Bartlett’s Critique
Memo to Bruce Bartlett, David Tuerck Op-Ed, State Tax Notes
