FairTax Overview
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
primarily by existing state sales tax authorities. The IRS is disbanded and defunded. The FairTax taxes us only
on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient,
transparent, and intelligent solution to the frustration and inequity of our current tax system.
What is Americans for Fair Taxation® (FairTax.org)?
FairTax.org is a nonprofit, nonpartisan, grassroots organization solely 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 call 1-800-FAIRTAX.
Written by Karen Walby, Ph.D., Director of Research, Americans For Fair Taxation, www.fairtax.org. February,
2013.
The impact of the FairTax on charitable giving and nonprofit organizations
Many assume that the level of charitable giving in America is driven by the tax code and tax deductions,
concluding that if charitable donations were not deductible, then charitable organizations could not exist.
Nothing could be further from the truth.
After the 1986 Tax Reform Act, charitable giving increased rather than decreased, despite the
lowering of marginal income and transfer tax rates. Charitable giving rose by $6.4 billion, or 7.6
percent, in 1987 after the top tax rate fell from 50 to 28 percent (more than doubling the tax price of
giving).70 Likewise, the growth of charitable bequests was most rapid from 1980 to 1987 when estate
taxes were coming down.71
70
Stephen Moore’s response in “Republic of Taxes: When Uncle Sam Takes Do Americans Give?” Philanthropy Magazine,
Spring, 1997.
71
Based on federal estate tax returns data reported in Reynolds, Alan, “Death, Taxes and Giving: The Conventional Wisdom
and Why it is Wrong,” Philanthropy Magazine, Winter, 1997.
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