FairTax Overview
Gary and Aldona Robbins, Fiscal Associates, show that replacing the current tax system with a flat rate
system that taxes capital and labor income equally – such as the FairTax – would increase the GDP by
36.3 percent and increase private output by 48.4 percent over the long run. 105
Finally, a 1997 Joint Committee on Taxation report summarized results from nine different economic
models, all finding that a change to a single rate consumption tax would increase investment and boost
economic growth.106
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 (HR 25) abolishes all federal personal
and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and selfemployment 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.
Summaries prepared by Karen Walby, Ph.D., Director of Research, Americans For Fair Taxation,
www.fairtax.org. September, 2012.
105
Robbins, Gary and Aldona, “Looking Back to Move Forward: What Tax Policy Costs Americans and the Economy,”
Institute for Policy Innovation, Policy Report No. 127, September 1, 1994.
106
Joint Committee on Taxation, “Tax Modeling Project and 1997 Tax Symposium Papers,” JCS-21-97, November 20, 1997.
Symposium participants: Alan J. Auerbach, Charles L. Ballard, Michael J. Boskin, Roger E. Brinner, Eric Engen, William
Gale, Jane G. Gravelle, Dale W. Jorgenson, Laurence J. Kotlikoff, Joel L. Prakken, David Reifschneider, Robert D.
Reischauer, Aldona Robbins, Gary Robbins, Diane Lim Rogers, Harvey S. Rosen, Joel Slemrod, Kent Smetters, Jan Walliser,
Peter J. Wilcoxen, John G. Wilkins.
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