What exactly will be taxed?
A single rate, single-stage tax will be applied to the sale of all new consumer goods and services at the final point of consumption. This will result in 23% of a purchase being represented by tax. (For a discussion of “tax inclusive” vs “tax exclusive” Rates, see below.) Used items will not be taxed. Business-to-business purchases for the production of goods and services will not be taxed. Most importantly, you will keep 100% of your paycheck; there will be no more income, capital gains, self-employment, gift or corporate taxes and all households will receive a monthly rebate check. Under the FairTax no American will pay taxes on necessities. The rebate will be equivalent to the tax paid on esential goods and services and rebate checks will be mailed before the tax is actually paid. Monthly rebate checks are paid in equal installments at the beginning of each month and the size of the monthly rebate is determined by the federal poverty level for a particular household size.
