Page "FairTax" Paragraph 1

As defined in the legislation, the tax rate is 23 % for the first year.

This percentage is based on the total amount paid including the tax ($ 23 out of every $ 100 spent in total ).

This would be equivalent to a 30 % traditional U. S. sales tax ($ 23 on top of every $ 77 spent —$ 100 total ).

The rate would then be automatically adjusted annually based on federal receipts in the previous fiscal year.

With the rebate taken into consideration, the FairTax would be progressive on consumption, but would also be regressive on income at higher income levels ( as consumption falls as a percentage of income ).

Opponents argue this would accordingly decrease the tax burden on high-income earners and increase it on the middle class.

Supporters contend that the plan would effectively tax wealth, increase purchasing power, and decrease tax burdens by broadening the tax base.