FairTax FAQ's / Miscellaneous

How will the FairTax affect the costs of good and services?

The FairTax will dramatically reduce the costs of goods and services by as much as 20–30%. All goods and services already contain the embedded costs of the current tax system in their prices. When these embedded taxes are removed, prices will come down. Dr. Dale Jorgenson, Chairman of the Economics Department at Harvard University, has projected a producer price reduction of 20–30% in just the first year after adoption of the FairTax. Dr. Jorgenson also estimated that service prices would decline by 25% because of the repeal of the income tax. In addition, the FairTax will lower compliance costs by more than 90%, and the removal of these costs will force prices down even lower.

 

How will the FairTax affect federal government funding?

The FairTax plan is devised to be revenue-neutral for the first year of operation. It will raise the same amount of revenue as is raised by current law. After the first year, revenue is expected to rise because of the growth generated by this plan. It bring trillions of dollars back into our economy and create millions of jobs.

Under the FairTax, citizens will better be able to determine if their elected representatives are acting in their best interest. Legislators will be held accountable for their decisions, because the FairTax is highly visible. And because there is only one tax rate, Congress will not be able to adopt the typical “divide-and-conquer,” “hide-and-disguise” strategy employed today to promote special interests. For the first time in decades, it will be simple to see whether a politician is advocating an increase in taxes for a program truly supported by the people in his district. This is not the case with our current tax code. The FairTax has bi-partisan support from people in all walks of life. Its supporters share one common belief: that it is a fairer, simpler, more efficient way to raise federal revenue.

 

FairTax affect charitable giving?

The FairTax will allow people to make charitable contributions out of pre-tax dollars. With more money to spend, more people will give. Most taxpayers today cannot deduct their contributions, and only the relatively few who itemize may deduct their contributions with after-tax payroll dollars. For those generally less affluent taxpayers who do not itemize, the cost of charitable giving will actually go down under the FairTax, because they will be able to make contributions from pre-tax dollars.

 

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