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  • FairTax MI 10th
    News Release For more information, contact Tom Wright or Genie Hayes at 1-800-FAIRTAX. For immediate release: FairTax (national retail sales tax) zeros all
    Message 1 of 1 , Oct 1, 2004

                   News Release

      For more information,
      contact Tom Wright or
      Genie Hayes at 1-800-FAIRTAX.

      For immediate release:


      FairTax (national retail sales tax) zeros all federal taxes
      up to the poverty level for everyone
      and only wealthy/lavish spenders pay the maximum rate.
      Effective rates for the middle class go down (


      Houston, TX – Sept. 29, 2004 ‑ “The FairTax (HR 25/S 1493) is better for the middle class than the current income tax system,” stated Tom Wright, FairTax .org executive director.  “Their paychecks come to them complete, with no federal withholding of any kind.  They no longer pay the regressive Social Security tax, with a threat of huge increases to fulfill obligations to our seniors.  No American pays a dime of tax, hidden or obvious, on the necessities of life up to the poverty level.  They keep no records, file no returns, suffer no audits.  Financial institutions no longer perform surveillance functions for the Internal Revenue Service.” 

      “Under the FairTax , the American middle class becomes invisible to the federal tax collector, as their churches and their businesses,” continued Wright.

      “The middle class’ effective tax rate is absolutely reduced by this progressive system,” added Wright.  “How much tax they do pay is entirely based on how they choose to live their lives.  The FairTax is a revenue neutral proposal, raising no more or less revenue than does the current system, but it is progressive.  Those who spend more, will pay more tax.  Only the biggest spenders pay the maximum effective rate; those at or below the poverty level pay an honest and transparent nothing.”


      Here are some sample tax returns from the American middle class:

                                                                                             Current        FairTax
      Effective tax rates                                                         system         system

      ·        A couple living solely on Social Security
      Annual income:  $25,944/year..................................... 22.0%           10.3%

      ·        Married couple / two children
      Annual income:  $32,136/year..................................... 31.5%             9.2%

      ·        Single mother / two children and mortgage
      Annual income:  $45,000                                             30.2%           10.6%

      ·        Married couple /two children and mortgage
      Annual income:  $65,000............................................ 30.5%           13.6%

      Use this link to download a chart that shows the progressivity of the
      FairTax for a family of four across annual spending from $5,000 to 100,000:


      1. The FairTax plan is revenue neutral; it neither raises nor lowers taxes.  The rate is set to raise the same revenue that the replaced taxes produce today.  For most taxpayers, that is a zero sum game:  They pay no more or less, unless they change their spending habits.  As an organization, we wish to remove ourselves from battles over tax hikes or cuts, special interests, winners and losers.  While the FairTax will make federal taxes very, very obvious (and easy for taxpayers to control themselves), there is no intention to give large groups any break over what they are paying now, nor to burden another group.  With one significant exception.  See #7 below.
      2. The FairTax plan is cost neutral.  Federal tax costs currently hidden in the price of retail goods and services come out of the price and become part of the federal sales tax.  Compliance costs currently hidden in prices simply go away, to the tune of some $250 billion each year. 
      3. The FairTax encourages American manufacturing.  Without these hidden taxes and compliance costs, American-made goods are more affordable in our country and more competitive overseas.  This will bring good jobs back to our shores, as well as keeping those we have, here.
      4. The FairTax ends federal paycheck deductions of all kinds; the workingman or woman gets a full paycheck.  The plan is a total replacement for all income and Social Security taxes:  Personal, gift, estate, capital gains, alternative minimum, earned income tax credit, Social Security, Medicare, self-employment, and corporate taxes.
      5. The FairTax provides the funds necessary to ensure the promise of Social Security through a broad, progressive sales tax (rather than today’s narrow, regressive payroll tax), while making sure those living only on Social Security pay less tax.  The FairTax also funds Social Security reform, whatever form that might take, without massive hikes in payroll taxes that would be a terrible burden on working class Americans and our children’s future.

                                                                                       Current        FairTax
      Effective tax rates                                                   system         system

      ·        A couple living solely on Social Security
      Annual income:  $25,944/year............................... 22.0%           10.3%


      1. Taxpayers decide how much tax they pay above the poverty level; they pay none up to the poverty level.  The wealthy will finally be taxed according to their lifestyle, which the income tax has miserably failed to do since its inception; those who choose to live modestly will pay less (both as a percentage of spending and overall taxes paid).  And the FairTax successfully taxes accumulated wealth, which the estate tax does not.
      2. The criminal, underground, drug, and porn industry pay taxes under the FairTax.  Under the income tax these groups – by and large – do not pay income or payroll taxes.  Under the FairTax , they will when they buy their jewelry, cars, furs, and more.
      3. When we move to the FairTax, the overall cost of raising the same federal revenue is reduced by some 90 percent.  Just as a rule of thumb, the number of tax returns (thus points of surveillance, collection, enforcement, audits, prosecution, etc.) is currently about 200 million.  Under the FairTax , we estimate there will be some 20 million retail sales tax returns to state sales tax collection agencies, where an estimated 90 percent of sales taxes are collected by eight percent of retailers.
      4. FairTax is a progressive sales tax. 
        Only the biggest spenders pay the maximum rate; those at or below the poverty level pay an honest and transparent nothing.
        No one living at or under the poverty level as determined by the Department of Health & Human Services will pay any federal tax (hidden or obvious) on any of their spending.  Today our working poor are burdened with the most regressive tax of all, Social Security, which they pay with every paycheck their entire working lives.  The FairTax ends that.  Those same people are targeted by unscrupulous tax preparers and the IRS due to the complexity of the earned income tax credit.  People on fixed income (and every other consumer in America ) pay an average of 22 percent in hidden corporate taxes and compliance costs with every good they buy.  Hidden taxes in services average 25 percent.  The FairTax ends this.  The FairTax does not tax used goods.  And finally, a rebate zeros the tax up to the poverty level.

                 Current   FairTax
      Effective tax rates                                                                                      system               system

      ·         Single parent / two children / minimum wage
      Annual income:  $10,712/year.......................................................... 3.3%                -2.9%

      ·         A couple living solely on Social Security
      Annual income:  $25,944/year....................................................... 22.0%               10.3%

      ·         Married couple / two children
      Annual income:  $32,136/year....................................................... 31.5%                 9.2%

      ·         Single mother / two children and mortgage
      Annual income:  $45,000/year                                                        30.2%               10.6%

      ·         Married couple /two children and mortgage
      Annual income:  $65,000/year....................................................... 30.5%               13.6%

      ·         Married couple / two children / homeowner
      Annual income:  $100,000/year..................................................... 33.8%               15.0%

      1. The FairTax booms residential real estate.  The current home interest deduction is very limited compared to the FairTax .  Under the new system, every homeowner’s entire house payment is tax exempt, not just the interest as today.  Savings are not taxed, allowing buyers to save a downpayment faster.  And interest rates will be lower.
      2. Tax cheating is reduced under a sales tax.  We are Americans, we hate taxes, we are creative, and we will cheat successfully, just as we do today.  However, it takes two to cheat with a sales tax:  You and that cashier at Wal-Mart.  With 90 percent of all sales taxes collected by some eight percent of retailers, cheating and the black market moves into the rounding error category, from the rampant category where it is with the income tax today.
      3. Radical change coming from the grassroots is nothing new in America.
        Women getting the right to vote came from a grassroots movement demanding change; it only affected half of our adult population.  Repealing Prohibition was a very popular, grassroots movement supported by only a segment of our population.  To get the right to collective bargaining, union members sat down and shut down manufacturing plants in the 1930s; they were a minority grassroots movement.  Blacks sitting anywhere on the bus and at lunch counters were yet another grassroots movement, again by a minority, that drove elected servants to act.  The income and Social Security tax system burden every American, regardless of age.  They reduce paychecks for the worker.  They increase prices for the consumer.  They mortgage the future of our youth.  The FairTax is only just the latest in the grassroots movements that have changed our country for the better.
      4. We’ve spent more than $22 million in market and economic research.  If there are any more questions about just who we are and what we are up to, go to our website (www.fairtax.org) where there is an extensive FAQ.  Or call 1-800-FAIRTAX and ask for Tom Wright or Genie Hayes .


      What is the FairTax?
      The FairTax is a non-partisan legislation (HR 25/S 1493) that abolishes personal, gift, estate, capital gains, alternative minimum, earned income, Social Security/Medicare, self-employment, and corporate income taxes and replaces them all with one simple, visible, federal retail sales tax.  The FairTax dramatically changes the basis for taxation by eliminating the root of the problem:  Taxing income.  The FairTax taxes us only on what we choose to spend, not on what we earn.  It does not raise any more or less revenue; it is designed to be revenue neutral, so it is also price neutral.  The final cost for goods and services changes little under the FairTax.  The FairTax is a fair, efficient, and intelligent solution to the frustration and inequity of our current tax system.


      Who is Americans For Fair Taxation (FairTax.org)?

      FairTax.org is a non-profit, non-partisan, grassroots organization dedicated to replacing the current tax system.  The organization has hundreds of thousands of members and volunteers nationwide.  Its plan supports sound economic research, education of citizens and community leaders, and grassroots mobilization efforts.  For more information visit the web page: www.fairtax.org or 1-800-FAIRTAX.


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