Differences in Tax Rate Percentages of Selected Proposals

• Transform America Transaction Fee: The Transaction Fee replaces all federal taxes on individuals and corporations with a transaction fee. The Congressional Research Service (CRS) has indicated that one of the most technically feasible implementation approaches to achieve revenue neutrality under this plan is to extract a minor fee (roughly 0.4%) from the $750 trillion passing through the Federal Reserve Bank system annually. Additionally, CRS has estimated that the fee could be as high as 5 percent when making broader revenue assumptions.
   
• Consumed Income Tax (a form of flat tax): Taxpayers would keep their assets in an account equivalent to an IRA. Net contributions to this account (contributions minus withdrawals) would be deducted from income to determine the level of consumed income. Current proposals list the tax rate at 20 percent.
   
• Flat Tax: Two major components comprise the flat tax: a tax on wages and a tax on business’ cash flow. Subject to variations, proposed tax rates for the flat tax range from 10 to 20 percent.
   
• National Sales Tax: In contrast to a VAT, a retail sales tax is a consumption tax levied only at a single stage of production – the final retail stage. The retailer collects a specific tax percentage from the consumer, which is then forwarded to the government. Subject to variations, proposed tax rates for the national sales range from 15 to 23 percent.
   
• Value-Added Tax: A VAT is a tax, levied at each stage of production, on a firm’s value added. A firm’s value added is the difference between its sales and purchases of inputs from other firms. Subject to variations, proposed tax rates for the VAT range from 8 to 20 percent.