There are a lot of misconceptions and misunderstandings regarding the FairTax plan. In this article we’ll try to address some of the more common ones.
Is Healthcare taxed? Are mortgages taxed? Is food and water taxed?
Yes, products and services are taxed, but only at the retail level. All the embedded taxes that we are currently paying are removed from the system under the FairTax plan. Rather than prices increasing it is estimated that they will remain at about the same level because the taxes currently being collected by each member of the supply chain no longer exist.
How does the prebate work?
The prebate insures that no one pays any taxes on spending up to the poverty level. Meaning if poverty level income for a family of four is $22,000 then they will be ‘pre-imbursed’ for the taxes they will pay on spending up to that amount. Now, instead of simply not having to pay income taxes they also do not have Social Security, unemployment, and all the other withholding taxes subtracted from their paychecks before they ever see them.
Will we lose the Mortgage Interest Deduction?
The Mortgage Interest Deduction is an income tax deduction, but under the FairTax plan you’re no longer paying taxes on income so there’s no need for a deduction. Additionally, the FairTax only taxes newly constructed homes. Pre-existing home sales are not taxed. And additionally again, when you purchase a home under the current system your dollars have already been taxed. Under the FairTax plan you will receive all of your paycheck up front enabling you to save a bigger down payment in a shorter amount of time, and thus reducing your mortgage payment.
People will just stop spending and there will be no tax revenue.
People will not stop spending. In fact, when we compare our Personal Consumption Expenditures to our Adjusted Gross Income we discover that spending is a much more consistent and reliable measure. When times are good, people spend. When times are tough, people spend. Those of us living paycheck to paycheck may cut back on our discretionary spending, but those who have money continue to spend and some even increase their spending when there are bargains to be had.
What else is in the FairTax?
Lots of things but here’s one more thing to consider. There are millions of tourists and visitors who come to our country every year. Under the present system they contribute nothing in the way of federal revenue, but under the FairTax plan every dollar they spend will be a donation to our federal tax coffers.
Read the Bill (H.R. 25); read the books. Educate yourself. Passing and implementing the FairTax plan could, in one fell swoop, correct the direction of this country and remedy many of our growing problems. It’s fair, transparent, and simple. It’s everything our government doesn’t want so it’s up to us to understand it and insist upon its passage.
For more information and answers to questions about the FairTax plan visit www.FairTax.org.