FairTax Overview
haven improving on the Cayman Islands model.
The cost of capital is much lower. Banks’ costs are reduced by about 25 percent. And the huge pool of
U.S. firms’ profits currently trapped offshore comes home, putting substantial downward pressure on
interest rates simply due to the availability of capital. Firms producing here do not pay taxes on their
profits, unless an American owner’s profits are used to fund consumption, or a foreign income tax
imposes taxes on a foreigner’s income earned here. The United States is the most attractive place to
build plants in the world. Our sound political and economic system, educated workforce, unparalleled
infrastructure, large domestic market, and - once the FairTax tax is passed - extremely attractive tax
system draws capital to, and keeps capital in, the United States. The giant sucking sound is jobproducing and productivity-enhancing capital flowing to the United States from throughout the world.
The FairTax has broad impact.
In conclusion, the income and Social Security tax systems have a broad and universally negative affect
on the American society as a whole. The power to tax is the power to destroy. The FairTax has an
equally broad impact, though positive. This is a tax through which the individual has the ultimate power
to be taxed – or not. To control the amount of taxation with each purchase. And to avoid taxation
altogether, should they chose to live very modestly – at or near the federally mandated poverty level.
Besides the multitudinous jobs this returns to American workers, it also reestablishes civil liberties with
equal, if not greater, quantity. And this freedom, if perhaps esoteric, may be more important than the
tangible result of a good job.
What is the FairTax Plan?
The FairTax Plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an
integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal
taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion
legislation, the repeal of the 16th Amendment. This nonpartisan legislation (HR25/S122) abolishes all federal
personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare,
and self-employment taxes and replaces them with one simple, visible, federal retail sales tax – administered
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