FairTax Overview
Simplicity
A fundamental notion of fairness is that citizens should be able to comprehend the laws that affect them.
However, current tax law is beyond the comprehension of most taxpayers, including many of those who
devote their entire professional lives to it. In the long-running experiment of the income tax, it is fairly
well demonstrated that it is the nature of the income tax as a hidden tax that breeds complexity. The
constantly growing complexity of our tax system is part of a trend that began in 1913 and has only
accelerated with the nearly perennial enactment of new tax legislation with 4,428 changes to the tax
code in just the last decade. The continuous tinkering with the tax code has resulted in tripling the
length of the tax code, now a mind-boggling 3.8 million words, and that, on average, has more than one
new provision added to it daily. 92 The combined federal income tax code, regulations, and IRS rulings
have mushroomed from 14,000 pages in 1954 to 73,954 pages by 2013 – an increase of 428 percent.93
To cope with this complexity, nearly 60 percent of taxpayers hire paid preparers and another 30 percent
rely on commercial software to prepare their returns.
The FairTax is simple: One single rate, with no exceptions and no exclusions, collected at the point of
purchase. The simplicity of the FairTax means that tax planning is now within the reach of the ordinary
taxpayer, who can choose the amount and timing of federal tax payments by deciding when to make
purchases and whether to buy new or used products.
Efficiency
In addition to the taxes on income that we pay, we also pay the cost of payroll and corporate taxes that
are embedded in every product that we purchase. Businesses pass their costs on to consumers in the
form of higher prices. But the burden to the consumer doesn’t stop there. We also pay for the cost of
complying with the tax code. So complicated has the income tax system become that an analysis of IRS
data by the Taxpayer Advocate Service estimated that individual taxpayers and businesses spend 6.1
billion hours each year complying with the filing requirements of the Internal Revenue Code. Massive
amounts of our national wealth are consumed merely by measuring, tracking, sheltering, documenting,
and filing our annual income. The twin burdens of time and money required for record keeping, tax
form preparation, calculating and funding estimated payment schedules, and tracking income and
expenses are eliminated by the FairTax.
While the economic burden occasioned by compliance has been estimated many ways by many
researchers, with a correspondingly large range of values, the most recent credible study shows that U.S.
taxpayers waste an astounding $431.1 billion annually on tax compliance. If