What Is The Fair Tax And Why Should You Care

What is​ the​ Fair Tax And Why Should you​ Care?
The U.S .​
Federal Income Tax Code is​ a​ tax on​ the​ income of​ American companies and citizens enacted by the​ government .​
The U.S .​
Constitution gives Congress the​ power to​ impose taxes,​ duties,​ imposts,​ and excises.
The purpose of​ the​ Tax Code is​ to​ provide income for the​ operation of​ the​ government .​
The Tax Code is​ found in​ Title 26 of​ the​ U.S .​
Code of​ Federal Regulations (CFR).
Any U.S .​
citizen who has filled out a​ federal tax return knows how confusing the​ current U.S .​
Tax Code is​ .​
Additional layers of​ complexity appear if​ the​ taxpayer itemizes deductions,​ deducts home business expenses,​ or​ has a​ profit or​ loss due to​ investments .​
When the​ convolutions of​ corporate tax law are considered,​ it​ is​ no wonder that companies hire teams of​ accountants to​ prepare their income tax returns.
What is​ the​ Fair Tax?
The Fair Tax is​ a​ proposed income tax system intended by its founders to​ replace the​ current Tax Code .​
The Fair Tax Bill was proposed by Representative John Linder (R-GA) in​ July 1999 to​ the​ 106th Congress.
One definition of​ the​ Fair Tax is​ a​ proposed change in​ United States tax laws to​ replace all federal personal income taxes,​ payroll taxes,​ corporate taxes,​ capital gains taxes,​ self-employment taxes,​ gift taxes and inheritance taxes with a​ national retail sales tax and monthly tax rebate to​ all households.
At the​ time of​ this writing,​ the​ Fair Tax proposes to​ apply a​ tax of​ about 23% on​ purchases .​
This purchase tax would replace the​ current income tax paid by Americans .​
Generally,​ those who spend or​ purchase more would pay more taxes .​
Conversely,​ those who spend less would pay less or​ even nothing.
Differences Between the​ Tax Codes
The current Tax Code is​ based on​ the​ income of​ a​ person or​ corporation .​
The proposed Fair Tax would be based on​ the​ purchases of​ a​ person or​ corporation .​
The expectation of​ the​ proposed Fair Tax is​ that those who are more wealthy generally purchase more,​ and will therefore would likely pay higher taxes than they do now .​
Another major difference is​ the​ complexity of​ the​ two Tax Codes .​
As the​ Fair Tax Bill sponsor Representative Linder states on​ his website:
I would also encourage everyone to​ review the​ Fair Tax,​ as​ it​ is​ only 132 pages,​ which stands in​ stark contrast to​ the​ more than 50,​000 pages of​ tax code laws and regulations currently in​ effect.
Furthermore,​ the​ proposed Fair Tax Code would be administered by the​ States .​
Most states already enact a​ state income tax,​ and therefore have the​ infrastructure in​ place to​ collect the​ Fair Tax revenues .​
This would also mean greatly reducing,​ or​ even eliminating,​ the​ Internal Revenue Service (IRS)!
Monthly Tax Rebate Checks
Under the​ Fair Tax plan,​ each household would receive a​ monthly tax rebate check,​ paid in​ advance .​
The amount of​ the​ check would be estimated as​ the​ amount of​ Fair Tax owed on​ poverty level spending .​
The goal of​ the​ monthly rebate check is​ to​ prevent anyone from being taxed on​ household necessities,​ especially those under the​ poverty level.
Will the​ Fair Tax Provide Enough Government Income?
The feasibility of​ the​ proposed Fair Tax is​ the​ topic of​ endless discussion .​
On one hand,​ the​ entire taxation process would be greatly simplified .​
Wealthy persons and corporations would pay a​ greater share of​ taxes.
On the​ other hand,​ a​ Tax Code change of​ this magnitude will require massive reeducation of​ the​ public .​
People are resistant to​ change,​ and would no doubt cry foul at​ being denied many of​ their usual tax deductions.
Finally,​ the​ only way to​ accurately assess the​ effectiveness of​ the​ proposed Fair Tax Code is​ to​ see it​ in​ action over a​ period of​ years .​
That does not look likely in​ the​ very near future,​ although the​ Fair Tax proposal is​ gaining support.
Tax Your Brain
Whether you​ are for it​ or​ against it,​ you​ must agree that the​ proposed Fair Tax would represent a​ dramatic shift in​ U.S .​
taxation policy if​ enacted .​
Proponents and opponents of​ the​ Fair Tax Bill will no doubt continue to​ generate tax estimates that are supportive of​ their arguments .​
It is​ up to​ you​ as​ an​ American taxpayer to​ become educated on​ the​ Fair Tax Bill .​
Determine whether the​ proposed changes and tax payment methods would benefit you​ and the​ country more than the​ current system .​
Once you've made a​ decision about the​ proposed Fair Tax,​ contact your Senators and Representatives and tell them how you​ feel about it .​
Regardless of​ the​ tax system in​ place,​ you​ are still paying their salary.
The website below provides free information about income tax preparation tips and tax assistance articles and resources.
What Is The Fair Tax And Why Should You Care What Is The Fair Tax And Why Should You Care Reviewed by Henda Yesti on July 06, 2018 Rating: 5

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