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FairTax Act of 2023
12/15/2023, 3:53 PM
Summary of Bill HR 25
Proponents of the FairTax Act argue that this new tax system would simplify the tax code, eliminate loopholes, and promote economic growth by encouraging savings and investment. They also believe that the national sales tax would be more fair and transparent, as everyone would pay the same rate regardless of income level.
Opponents of the bill, however, raise concerns about the potential impact on low-income individuals and families, who may end up paying a larger share of their income in taxes under the new system. They also worry about the potential for tax evasion and the difficulty of implementing such a drastic change to the tax code. Overall, the FairTax Act of 2023 has sparked a lively debate in Congress and among the American public about the best way to reform the tax system to promote economic growth and fairness. It remains to be seen whether this bill will gain enough support to become law.
Congressional Summary of HR 25
FairTax Act of 2023
This bill imposes a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income taxes, payroll taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2025, with adjustments to the rate in subsequent years. There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions.
Under the bill, family members who are lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon criteria related to family size and poverty guidelines.
The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury.
Tax revenues are to be allocated among (1) the general revenue, (2) the old-age and survivors insurance trust fund, (3) the disability insurance trust fund, (4) the hospital insurance trust fund, and (5) the federal supplementary medical insurance trust fund.
No funding is authorized for the operations of the Internal Revenue Service after FY2027.
Finally, the bill terminates the national sales tax if the Sixteenth Amendment to the Constitution (authorizing an income tax) is not repealed within seven years after the enactment of this bill.
