authentic jerseys from china cheap oakleys cheap michael kors replica oakley sale red bottoms shoes on sale wholesale oakleys cheap nfl jerseys michael kors outlet on sale wholesale oakleys cheap christian louboutin outlet cheap oakleys store cheap michael kors oakleys sales cheap jerseys paypal cheap fake oakleys cheap oakleys michael kors store Christian Louboutin Outlet discount fake oakleys cheap authentic nfl jerseys cheap replica oakleys cheap michael kors handbags cheap fake oakleys red bottoms shoes fake oakleys wholesale jerseys from china christian louboutin outlet cheap michael kors wholesale jerseys free china cheap jerseys replica michael kors bags fake oakleys shop cheap jerseys cheap fake oakleys cheap michael kors michael kors bags sale cheap michael kors outlet ray bans sunglasses wholesale china jerseys cheap mlb jerseys cheap fake oakleys wholesale nba jerseys christian louboutin outlet wholesale oakleys wholesale authentic jerseys christian louboutin store cheap michael kors outlet cheap jerseys online shopping cheap ncaa jerseys michael kors bags cheap fake oakleys cheap jerseys wholesale cheap fake oakleys cheap replica oakleys cheap michael kors wholesale jerseys ray bans sunglasses cheap nba wholesale jerseys fake oakleys fake oakleys cheap nfl jerseys wholesale cheap christian louboutin fake oakleys jerseys outlet cheap christian louboutin cheap fake oakleys cheap mlb jerseys free shopping cheap ray bans michael kors handbags fake oakley sunglasses wholesale elite jersyes cheap fake ray bans replica oakleys replica michael kors outlet replica oakleys fake oakleys cheap wholesale cheap jerseys replica oakleys replica christian louboutin replica ray bans cheap sunglasses cheap jerseys wholesale christian louboutin fake oakleys replica christian louboutin cheap jerseys cheap michael kors outlet cheap oakley cheap jerseys cheap fake ray bans replica oakleys michael kors bags fake cheap oakleys fake oakleys cheap jerseys wholesales cheap michael kors outlet discount christian louboutin outlet fake ray bans online store oakleys sale wholesale jerseys china christian louboutin outlet cheap oakleys cheap christian louboutin fake ray bans

FairTax Basics

The FairTax happens to be the most thoroughly researched tax reform plan in recent history. Below is a quick introduction to the FairTax and tax reform. Note also that the implementation of the FairTax and the subsequent increase in economic activity that ensues will all happen without increasing the debt or selling bonds to foreign countries. It is a pure economic stimulus all on its own.

Scholarly research tells us that . . .

  • The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars $358 billion more than the taxes it replaces.  [1]
  • The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan.  [2]
  • Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case.  [3]
  • Disposable personal income is higher than if the current tax system remains in place:  1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.  [4]
  • The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be.  [4]
  • Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.  [4]
  • The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.  [4]
  • By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent. [4]
  • Over time, the FairTax benefits all income groups.  Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [5]
  • Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively.  [6]
  • Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax.  [7]
  • Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20.  [8]
  • On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base.  [9]
  • The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent.  [10]

References

[1] Bachman, Paul, Jonathan Haughton, Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, and David G. Tuerck, “Taxing Sales under the FairTax:  What Rate Works?” published in Tax Notes, November 13, 2006. Click here to read the full paper.

[2] Tuerck, David G., Jonathan Haughton, Paul Bachman, and Alfonso Sanchez-Penalver, “A Comparison of the FairTax Base and Rate with Other National Tax Reform Proposals,” The Beacon Hill Institute at Suffolk University, February 2007.  Click here to read the full paper.

[3] Tuerck, David G., Jonathan Haughton, Keshab Bhattarai, Phuong Viet Ngo, and Alfonso Sanchez-Penalver, “The Economic Effects of the FairTax: Results from the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007. Click here to read the full paper.

[4] Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal,” July 2006.  Click here to read the full paper.

[5] Kotlikoff, Laurence J. and David Rapson, “Comparing Average and Marginal Tax Rates under the FairTax and the Current System of Federal Taxation,” NBER Working Paper No. 12533, revised October 2006.  Click here to read the full paper.

[6] Jokisch, Sabine and Laurence J. Kotlikoff, “Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax,” National Tax Journal, June 2007.  Click here to read the full paper.

[7] Tuerck, David G., Jonathan Haughton, Paul Bachman, Alfonso Sanchez-Penalver, and Phuong Viet Ngo, “A Distributional Analysis of Adopting the FairTax:  A Comparison of the Current Tax System and the FairTax Plan,” The Beacon Hill Institute at Suffolk University, February 2007.  Click here to read the full paper.

[8] Tuerck, David G., Jonathan Haughton, Alfonso Sanchez-Penalver, Sara Dinwoodie, and Paul Bachman, “The FairTax and Charitable Giving,” The Beacon Hill Institute at Suffolk University, February 2007.  Click here to read the full paper.

[9] Tuerck, David G., Paul Bachman, and Sylvia Jacob, “Fiscal Federalism:  The National FairTax and the States,” The Beacon Hill Institute at Suffolk University, June 2007.  Click here to read the full paper.

[10] Walby, Karen, and Dan Mastromarco, “Promoting home ownership:  How the FairTax’s benefits for homeowners exceed the mortgage interest deduction,” Americans For Fair Taxation White Paper, August 2006. Click here to read the full paper.

Karen Walby, Ph.D., Director of Research, Americans For Fair Taxation, Jan. 5, 2008.

Belly up to the counter. Politics are on the menu and Ross is on the grill.