A Conversation Sparked: FairTax Act

Abigayle Allen Opinion Editor

In early January 2023, U.S. Rep. Earl “Buddy” Carter (R-GA) proposed a national sales tax on the use or consumption of taxable property and services. This radical bill would not only work to abolish the IRS, but it would also replace any existing “federal taxes with a flat, nationwide 30% sales tax” (Smith 2023). While this bill does not have much chance of passing, it is a start in sparking a discussion regarding our current tax code. In terms of the fiscal challenges the U.S. is on track to face over the coming years, a discussion regarding tax reform was guaranteed to surface. With that being said, what is a fair tax rate and what does that mean for our economy? The bill itself outlines a 23 percent tax rate on both taxable property and services, combined with federal taxes, raising the tax rate closer to 30 percent. This rise in tax rate is set to take place in 2025 under the administration of each state’s treasury. The tax revenues would be distributed over “5 different categories: the old-age and survivors insurance trust fund, the general revenue, the hospital insurance trust fund, the federal supplementary medical insurance trust fund, and the disability insurance trust fund” (Kaufman 2023). Depending on guidelines set for poverty levels and family size, U.S. citizens will receive a monthly tax rebate – a Family Consumption Allowance. To combat the tax code challenges the US will face in the coming decade, Democrats and Republicans should come to realize that incorporating a flat tax may come as an easier burden than what meets the eye.The least painful option in terms of a smaller burden placed on working families and our economy as a whole.

“The center for a Responsible Federal Budget projects that the annual budget deficit could expand as much as 10% of gross domestic product by 2023” (Smith 2023).

In that case, interest payment alone would account for half the deficit, assuming the Federal Reserve Board is consistent in keeping interest rates high, combating inflation. In order to close the gap through spending cuts alone, an across-theboard reduction of 25 percent would be necessary. It is likely, however, that Social Security and defense would not suffer