The NationalTaxpayers UnionSupports H.R. 25

and S. 1025:

FairTax Act of 2007 ct of 2007 would promoteomoteomoteomoteomote

frfrfrfrfreedom, faireedom, faireedom, faireedom, faireedom, fairness, and economic oppor-ness, and economic oppor-ness, and economic oppor-ness, and economic oppor-ness, and economic oppor-tunity btunity btunity btunity btunity by ry ry ry ry repealing the income tax andepealing the income tax andepealing the income tax andepealing the income tax andepealing the income tax andother taxother taxother taxother taxother taxes, abolishing the Ies, abolishing the Ies, abolishing the Ies, abolishing the Ies, abolishing the Internternternternternal Rnal Rnal Rnal Rnal Rev-ev-ev-ev-ev-enue Senue Senue Senue Senue Sererererervice, and enacting a nationalvice, and enacting a nationalvice, and enacting a nationalvice, and enacting a nationalvice, and enacting a nationalsales tax to be administersales tax to be administersales tax to be administersales tax to be administersales tax to be administered primarily bed primarily bed primarily bed primarily bed primarily byyyyythe Sthe Sthe Sthe Sthe States.tates.tates.tates.tates.

The FThe FThe FThe FThe FairTairTairTairTairTax Aax Aax Aax Aax Act

Status:� Rep. John Linder (R-GA) introduced

H.R. 25 in the House of Representatives, and the bill currently has 65 cosponsors.

� Senator Saxby Chambliss (R-GA) intro-duced S. 1025 in the Senate, and the bill cur-rently has 4 cosponsors.

� The FairTax is featured prominently among the possible reforms being consid-ered by the President’s Advisory Council on Tax Reform,

Summary of The Fair

Tax Act of 2007:

� The Fair Tax proposal is a comprehensive revenue plan that would eliminate most major federal income and payroll taxes, in-cluding personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes. On payday, every American would receive 100 percent of his or her paycheck, minus any state income taxes.

� These federal taxes would be replaced by a national retail sales tax. Starting in 2009, the FairTax Act of 2007 would set the national sales tax rate at 23 percent, with adjustments made to the rate in subsequent years.

� The FairTax is progressive. To make this system fair for low-income Americans, all taxpayers would receive a monthly “pre-bate,” so no one would pay taxes for con-sumption up to the poverty line.

� The national retail tax would only be col-lected on new purchases, making “used” purchases tax-free. Additionally, business purchases would be exempt from the tax,

thereby eradicating corporate tax compli-ance costs currently hidden in retail prices.

� Existing state tax authorities would collect the national sales tax, allowing for the abol-ishment of the Internal Revenue Service. The FairTax plan also calls for the repeal of the 16th Amendment, which allows for the collection of federal income taxes.

� The FairTax Act is designed to be dollar-for-dollar revenue neutral; the plan is not designed to raise any more or any less rev-enue for the federal government. The ben-efit is a simpler, more accountable form of tax revenue.

Arguments for the FairTax: � The Fair Tax plan brings fairness, trans-

parency, and efficiency to our unfair, com-plex, and confusing Tax Code.

� The FairTax rewards job creation, hard work, and individual responsibility. By doing away with payroll taxes, companies can afford to hire more employees and outsourcing looks less attractive. By tax-ing consumption instead of income, indi-vidual are provided with a strong incen-tive to work hard because they keep more of what they make. By taxing spending, the FairTax allows us to control how much tax we pay depending on our individual lifestyle choices.

� The FairTax would provide significant eco-nomic and time benefits to taxpayers. The overall IRS-induced paperwork burden is cur-rently estimated at an annual cost of about $850 for every man, woman, and child in America. Doing away with the current tax code would lower compliance costs by 95 percent.

� The FairTax ensures that all Americans pay their fair share of taxes. The IRS currently admits to a 25 percent non-compliance rate with the tax code, often done unintention-ally. By placing the tax at the point of sale, no individual or special interest group could evade taxes with the help of an expensive tax attorney or well-heeled lobbyist. Further-more, we could stop making criminals out of ordinary Americans who prepare their tax returns incorrectly by mistake.

� The FairTax is progressive. The FairTax untaxes the poor by providing a monthly re-bate on consumption taxes up to the poverty level, which would also help middle-class Americans.

� The FairTax would lower consumer prices. Corporate income taxes and compliance costs are currently passed on to consumers in the form of higher retail prices. Studies estimate that these hidden costs average about 22 per-cent on goods and 25 percent on services. Eliminating these costs through the FairTax would lower consumer prices.

� The FairTax is revenue neutral. The FairTax plan leaves untouched the amount of money raised by the federal government, ensuring that federal program commitments won’t be under-funded.

“The FairTax is one of our brightest hopes for freeing American taxpayers from the tyranny and

oppression of the income tax. The Bush Administration has heard our call for fundamental tax reform and we encourage its review of national

sales tax legislation as an ideal alternative to a failed income tax system.”

John Berthoud, President of the 362,000-member National Taxpayers Union

What to ask of your Representatives and Senators: � PPPPPledge to supporledge to supporledge to supporledge to supporledge to support the Ft the Ft the Ft the Ft the FairTairTairTairTairTax.ax.ax.ax.ax.

� PPPPPledge to cosponsor H.R. 25 andledge to cosponsor H.R. 25 andledge to cosponsor H.R. 25 andledge to cosponsor H.R. 25 andledge to cosponsor H.R. 25 andS. 1025.

� Pledge to rledge to rledge to rledge to rledge to request committee hear-equest committee hear-equest committee hear-equest committee hear-equest committee hear-ings on the Fings on the Fings on the Fings on the Fings on the FairTairTairTairTairTax Aax Aax Aax Aax Act of 2007.

� PPPPPledge to rledge to rledge to rledge to rledge to request legislation beequest legislation beequest legislation beequest legislation beequest legislation bebrbrbrbrbrought up for a floor vought up for a floor vought up for a floor vought up for a floor vought up for a floor vote.ote.ote.ote.ote.

� PPPPPledge to vledge to vledge to vledge to vledge to vote in favote in favote in favote in favote in favor of H.R. 25or of H.R. 25or of H.R. 25or of H.R. 25or of H.R. 25and S. 1025.

NTU was established in 1969 to edu-cate taxpayers, the media, and elected officials on a non-partisan basis on the merits of limited gov-ernment and low taxes. NTU uses a variety of means to accomplish our work including direct mail, research papers, public speaking, email, adver-tising, the Internet, and lobbying.