Congress should pass H.R.25 - Fair Tax Act of 2013

I urge all of you to contact your congress people and restore this bill.

H.R.25 - Fair Tax Act of 2013

Introduced in House (01/03/2013)

Fair Tax Act of 2013 - Repeals the income tax, employment tax, and estate and gift tax. Redesignates the Internal Revenue Code of 1986 as the Internal Revenue Code of 2013.

Imposes a national sales tax on the use or consumption in the United States of taxable property or services. Sets the sales tax rate at 23% in 2015, with adjustments to the rate in subsequent years. Allows exemptions from the tax for property or services purchased for business, export, or investment purposes, and for state government functions.

Sets forth rules relating to: (1) the collection and remittance of the sales tax, and (2) credits and refunds. Allows a monthly sales tax rebate for families meeting certain size and income requirements.

Grants states the primary authority for the collection of sales tax revenues and the remittance of such revenues to the Treasury. Sets forth administrative provisions relating to: (1) the filing of monthly reports and payments of tax; (2) accounting methods; (3) registration of sellers of goods and services responsible for reporting sales; (4) penalties for noncompliance; and (5) collections, appeals, and taxpayer rights.

Directs the Secretary of the Treasury to allocate sales tax revenues among: (1) the general revenue, (2) the old-age and survivors insurance trust fund, (3) the disability insurance trust fund, (4) the hospital insurance trust fund, and (5) the federal supplementary medical insurance trust fund.

Prohibits the funding of the Internal Revenue Service (IRS) after FY2017. Establishes in the Department of the Treasury: (1) an Excise Tax Bureau to administer excise taxes not administered by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); and (2) a Sales Tax Bureau to administer the national sales tax.

Terminates the sales tax imposed by this Act if the Sixteenth Amendment to the U.S. Constitution (authorizing an income tax) is not repealed within seven years after the enactment of this Act.

https://www.congress.gov/bill/113th-congress/house-bill/25

 

There is nothing fair about that.

 

I'm okay with a Fair Tax, but there are a few points which require clarification.

1: Does the sales tax include expenditures such as rent, utilities, and payments on existing loans? Changing my taxation from 35 percent of earned income to 23 percent spent income is a big savings, however, considering that roughly 85 percent of my income goes to untaxed expenses that would be what? 4 percent taxation on earned income if I kept my spending even with my current rate and invested or saved the rest?

2: Are goods and services vital to survival taxable at the full rate? Groceries and medical treatment being two examples.

3: What legislation exists to tax profits earned by foreign investors? Could I build cars in Mexico, sell them in the United States, and avoid paying taxes on the profits? Would there be an import tax on those cars, and if it were an American based company would it still count as importing?

4: How do donations work into this tax code? Non profit organizations are traditionally tax exempt, however under this system the money they were paid is also exempted beyond current limitations.

5: How does the monthly tax rebate work? Does it need to be filed month by month, or is it done annually? Being a rebate, and not a credit, is it possible to get back more then was spent, i.e. an individual loses his job and is living on savings.

6: Does this take into account personal sales of property, inheritance, and gambling income? I can see where it would not, as those earnings are going to be taxed when spent, however, if I buy a house, and am taxed on it, then sell that house is it taxed again? If I win the lottery and move to Europe, are those tax dollars lost? On that thought, if I lose my life savings at a foreign owned casino do we tax that as spending? An import, or export?

My intention is not to argue against a spending tax; I like the idea. My intention is to close loopholes, because unless we find ways to tax every dollar spent everywhere the Nation will be bleeding revenue.