FairTax :: FAQs



	Does the FairTax affect all of those taxes on my phone bill? What is the FairTax? Will the FairTax affect my Social Security or Medicare benefits in any way? How much money will I receive each month in my prebate check? Isn’t it a big deal to tax services for the first time? It has never been done before. Why do some people say the rate is 30 percent instead of 23 percent? Does the FairTax repeal the 16th Amendment? The 23% tax rate seems too high. I just did my taxes, and after all of my deductions and exemptions, I only paid 14% of my income in taxes. Why is the FairTax a good deal for me? How can we be sure that the costs associated with the embedded taxes will disappear? How are state tax systems affected, and can states adequately collect a federal sales tax?

FairTax: State by State Action

Find out what your state is doing to promote the FairTax:

Browse FAQs

Q:	What is taxed?
A:	The FairTax is a single-rate, personal consumption tax (similar to a retail sales tax) collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive. (Thanks to FairTax.org for this explanation.)




	Will the FairTax affect my Social Security or Medicare benefits in any way? How much money will I receive each month in my prebate check? Why do some people say the rate is 30 percent instead of 23 percent? How much do Americans pay each year in Federal income tax compliance costs? Once the FairTax is passed and becomes law, what protection is there against a reinstitution of the income tax at a later date? Does the FairTax repeal the 16th Amendment? Is it safe to base American tax revenue on the sales tax? Isn’t consumption volatile? Isn’t it a big deal to tax services for the first time? It has never been done before. Has anything like the FairTax ever been tried before? Won’t people simply avoid the tax by trading and bartering rather than purchasing? Why is the FairTax helpful for capital formation in this country? Today, employers pay 7.65 percent of their payroll to the Federal government in a payroll tax. Do you expect that when the FairTax eliminates this tax that the employers will reduce their prices by this amount or increase wages by this amount? Does the FairTax affect all of those taxes on my phone bill? The 23% tax rate seems too high. I just did my taxes, and after all of my deductions and exemptions, I only paid 14% of my income in taxes. Why is the FairTax a good deal for me? How can we be sure that the costs associated with the embedded taxes will disappear? Right now I can deduct business lunches and other business expenses. I'm still going to have to take clients to lunch, but now I'll have to bear the entire cost. Does the FairTax have an answer to this problem? How will the FairTax affect charitable giving? How are state tax systems affected, and can states adequately collect a federal sales tax? What is FairTax.org? What is the FairTax? How would the FairTax be collected? What is taxed? What taxes does the FairTax replace? Does the FairTax rate need to be much higher to be revenue neutral?


		The Department of Commerce reports in its most recent Economic Census that just 688 retailers (0.03%) in the U.S. make 48.6% of all the sales. Just 3.6% of retailers collectively make 85.7% of all U.S. sales. Fewer points of collection will mean higher compliance with the FairTax than with today's complex system.