The Fairtax plan will benefit the economy and the majority of Americans

Before I begin, I would just like to ask that whoever accepts this debate has some prior knowledge of the Fairtax, understands its implications, and still disagrees with it. Thank you. Information about the fairtax can be found by reading the faq: http://www.fairtax.org... For those who don't know, the Fairtax Bill HR25, is the most widely supported alternative tax plan in congress, with 66 representatives and 4 senators who have publicly stated their support. The premise of the plan is to first abolish all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes, and replace them with a national sales tax, which would be placed on the purchase of all final, new goods services. The tax-inclusive rate would be 23%, which works out to be approximately 30% tax-exclusive(the way sales tax is normally reported). In addition, a prebate check would be paid at the beginning of every month to every lawful household in the country that would be equal to the poverty rate of spending, which depends on family size, multiplied by the tax-inclusive rate of 23%. The prebate offsets the cost of the tax on necessities, and makes the tax progressive. The amount of the prebate is found in the faq. There are many benefits to adopting a simplified tax code like the fairtax. The most apparent of which is the drastic cut in compliance costs. "In 2002 Americans spent roughly $194 billion dollars on tax compliance," and 6.6 billion hours filling out tax forms. That's 20 cents for every dollar collected. Under the fairtax, compliance costs drop drastically, as much as 95%, because the only cost is what would be paid to the states to collect the retail sales tax, which many of them already do. http://www.taxfoundation.org... Most importantly, net spending power increases for the average American family. Let's consider a middle-income married couple making $50k/year. If they spend all of their money on new goods and services(if they don't, their tax rate goes down further), their effective tax rate under the fairtax is 13.6%, whereas under the current system it is 15.8%, according to fairtax.org. However, I calculated the income plus payroll taxes to be 21.14%, so I'm not exactly sure why they calculated the income tax to be so much less. Either way, the couple is better off under the fairtax. Although the scenario described above assumes that the base price of the goods that they purchase will remain the same, businesses would likely lower their prices because they would not have to pay any taxes, thus lowering their costs. Lower costs translates to lower prices by means of competition. This means that purchasing power increases even further. Because investments(including college tuition) are not taxed under the fairtax, net investment is set to rise substantially under this plan. More investment translates into a lower interest rate and greater economic growth. Because the tax will only apply to domestic sales, American produced goods will be much more competitive overseas because businesses will be able to sell their product entirely tax-free, whereas they must currently charge a higher price in order to account for their income tax burden. This means that net exports also rise under the fairtax. Contrary to what some may think, tax evasion will decrease under the fairtax, and the reason is simple: there would be less tax-paying entities to account for, 20 million business instead of 140 million tax payers. Not only that, but the simplicity promotes compliance. According to the IRS, almost 40% of the public is out of compliance, and most of them probably don't even know it because they are confused by the complexity of the tax system. The common skepticism of the fairtax is who loses? It seems like everybody pays less under the fairtax, but that can't possibly true if it's revenue neutral. So who loses? Well, illegal immigrants lose out because they will now be subject to federal taxation, yet will receive no prebate check. People like Paris Hilton, spending their father's fortunes on frivolous things, will likely pay more in taxes under this plan. Any person who has made a majority of their money through capital gains, will likely pay more under the fairtax. But a poor family living pay check to pay check, will benefit substantially under the fairtax.