Fairtax (fairtax.org) Research Paper Example | Topics and Well Written Essays - 5000 words

Fairtax (fairtax.org) - Research Paper Examplegains, alternative minimum, Social Security, Medicare, and self-employment taxes with a federal retail sales tax to be levied once at the point of purchase on all new goods and services. According to proposed policy, every household of the United States is also eligible to receive a sales tax rebate each month. This rebate is equal to the product of (1) the sales tax charge per unit of 23% and (2) the family uptake allowance divided by twelve. One of controversial aspects of the FairTax reform is the ability to be revenue-neutral, which means whether it would gene dictate the same amount of overall federal tax revenues. Supporters of the FairTax claim the 23% rate is revenue-neutral while opponents disagree. Another common criticism of the FairTax is that it is regressive. That is, lower level income households bear a larger than genuine portion of the tax burden because most of their income is spent on essential daily need consumption items. Simultaneously, the proponents of the reform argue that the FairTax can be progressive due to exemptions or rebates. This particular paper aims to disassemble both sides of the debate and provide necessary empirical evidence based on the previous literary productions research regarding the controversial nature of the FairTax.In The Wealth of Nations, Adam Smith, the father of modern economics, laid come on certain criteria forejudging tax structures and tax policies. Specifically, he felt that equity, explicitness, simplicity of compliance, and economy of administration should be the cornerstones of all tax system. The current federal tax system is criticized as being too complicated and raw (Slemrod, 58). Efforts to simplify the current tax system, e.g., Tax Reform Act of 1986, are often viewed as superfluous in creating a fairer or simpler system (Hite and Roberts, 121). For example, the Presidents Advisory Panel on national Tax Reform (2005) points out that our cur rent tax code is a complicated mess. Instead of clarity, we do