How would the “Fair Tax” change the tax code?
It would scrap it almost entirely. You wouldn’t pay income tax, Social Security and Medicare payroll taxes, the alternative minimum tax, a capital gains tax or estate tax. No more complex tax returns to fill out, either. Instead, everyone would pay a flat sales tax on almost everything they buy: Food, clothes, new cars, diapers, even health care and financial services. How high would the sales tax be? Under the proposal, you’d pay a 30% mark-up over the pre-tax price. Hang on… I read another story about this and it said the Fair Tax would be 23% Well, it depends on how you want to do the math. Say you buy a $1 pack of gum, and then pay 30% in tax, for a total price of $1.30. The extra 30 cents you paid is 23% of $1.30. Sales tax supporters frequently cite the number as percentage of your spending. They say this makes it easier to compare the sales tax to the income tax. Critics, including conservative commentator Bruce Bartlett, have argued that people generally think of sales taxes
