Fair Tax Bill Introduced

January 11, 2011

On the first day of the 112th Congress, the Fair Tax Act (H.R. 25) was introduced by freshman Rep. Rob Woodall (R-Ga.) with 48 co-sponsors—the highest number of original co-sponsors ever.  Woodall is no stranger to the Fair Tax Act, prior to being elected to Congress; he was the Chief of Staff to Rep. John Linder (R-Ga.), the previous Fair Tax champion. Woodall helped draft the original bill language in 1999 and also aided in writing both Linder’s books on the Fair Tax.

H.R 25 would abolish all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment and corporate taxes and replace them all with one simple, visible, federal retail sales tax—collected by existing state stales tax authorities.

In response to overwhelming sentiment calling for a simpler, more fair and efficient, and less intrusive system of taxation, NSBA was the first small-business organization to endorse the Fair Tax. A 23-percent, single rate, national retail sales tax, the Fair Tax would applied to the sale of all consumer goods and services at the final point of consumption. The Fair Tax ensures that every taxpayer will be subject to the same tax rate with no exceptions and no exclusions. Those who are least able to share in the cost of government will bear no burden at all. Tax rates will depend on the amount of purchases made. Used items will not be taxed, which promotes reutilization. Business-to-business purchases for the production of goods and services will not be taxed.

Under the Fair Tax, compliance costs will fall to less than $10 billion, creating enormous net savings that eventually would be incorporated in lower product prices for consumers. The tax will be collected at retail businesses, taking the tax burden out of the hands of the consumers.  Already, most states have a sales tax system, and the Fair Tax would simply add an additional line onto the current sales tax reporting form. Businesses will collect the tax and send it to the state’s tax-collecting authority. All businesses serving as collecting agents will receive a fee for collection, and the states also will receive a collection fee. While the Fair Tax should not be interpreted as a tax cut, the reduction in work required to administer the new tax will certainly be a relief for business owners and consumers alike.

NSBA continues to advocate that the Fair Tax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of the United States’ current tax system.