FairTax Overview
from that investment is generated. Then, if the income-producing asset, such as a stock or bond,
equipment or real property interest is sold for more than it was purchased, the benefit of the capital
investment – the capital gain – is taxed a third time. If these investments are inherited, they are taxed
yet again. A principal advantage the FairTax has over an income tax, therefore, is that a down payment
can be saved without fighting against the cascading taxes on savings. Furthermore, since you keep
100% of your paycheck, you only have to earn $100 to save $100. Under today’s income/payroll tax
system, most people have to earn at least $121 to have $100 to save.
Education tuition is not taxed.
An equally important feature of the FairTax and its impact on young families is its treatment of
education. The FairTax exempts education tuition at the primary, secondary and college level,
recognizing that education is an investment in our nation’s intellectual capital and is every bit as
important as our investment in physical capital. Education is often a large expense for young families.
The FairTax creates jobs, rather than destroying them as our income tax system does.
The FairTax additionally benefits lower-income families through increased economic growth. Slow
economic growth or recessions have a disproportionately adverse impact on the poor and low-income
families. Breadwinners in \