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So, just how much will the FairTax be? The estimated percentage rate of the FairTax is 23% as an inclusive tax, and 30% as an exclusive tax. What’s the difference, you ask? That’s a very good question, and one that I think our good friend Denis Calabrese can answer better than I. Please give a listen to the short video below and it will all become clear.

What’s going to keep tax exemptions and exclusions from undermining the FairTax system?

That’s a fair question. The goal of the FairTax system is to tax everyone fairly. The same tax will apply to everyone and the few exemptions and exclusions that are written into the bill will apply to everyone, as well. Because of this transparency any attempt to tinker with the tax code will also effect everyone. Lawmakers will no longer be able to use the tax code to divide and conquer the people of this country by excluding or exempting certain groups from paying certain taxes, or heaping additional taxes onto specific groups. Because the tax is collected at the retail level at the point of consumption it applies across the board and the power to manipulate the code, and thus the people, simply goes away. Will it be possible for politicians to tinker with the FairTax? Only if we, as a people, let them.

Investments and savings will not be taxed under the FairTax system. Since education is clearly an investment in a person’s future, it will not be a taxable item under the FairTax.

If you didn’t have to pay taxes on your money when you earned it, and you didn’t have to pay taxes on money invested in education, how inclined would you be to finally finish that degree or how much more determined would you be to see that your child gets a quality education?

One point of confusion on the FairTax is that it will tax services that are not currently taxed. The truth is that consumers are already paying taxes when they pay for services. The income and payroll taxes that businesses are required to pay are included in the fees they charge for their services. The difference under the FairTax will be that the consumer will know exactly how much of the fee they pay is going to pay taxes and how much is actually going to the company they are patronizing.

Transparency in our tax system is something we have never known, but I think we could get used to it. If you don’t like it we can always hand the power back over to the politicians.

The FairTax plan is intended to be revenue neutral, meaning that it is a tax system that replaces dollar for dollar the current federal income and payroll based taxes. The FairTax bill, however, goes one step further by calling for the repeal of the sixteenth amendment to the U.S. Constitution, which allows Congress to levy an income tax. Without the repeal of the sixteenth amendment we could eventually have both, a federal consumption tax and a federal income tax. So, the repeal of the sixteenth amendment is imperative and in fact is written into the FairTax bill, H.R. 25. If, for whatever reason, the sixteenth amendment has not been repealed within seven years of the FairTax being enacted, then the FairTax bill has a sunset clause that will eliminate the federal sales tax to ensure that we are not saddled with both forms of taxation.