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What_Is_The_Fair_Tax_And_Why_Should_You_Care_

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									Title:
What Is The Fair Tax And Why Should You Care?


Word Count:
779


Summary:
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. T...



Keywords:
income tax,income,tax,taxes,fair tax,fair,tax,fairtax,tax deduction,tax return



Article Body:
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.




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