Have you heard about the Fair Tax proposal that has been advocated by Rep. John Linder (R-GA)? Basically, it calls for the complete elimination of income tax and replacing it with a consumption tax set at 23 percent. The IRS would be disbanded and defunded. The FairTax taxes everyone only on what they choose to spend on new goods or services, not on what they earn. Whenever you buy anything, you'd be hit with a 23% tax. But you would pay zero income tax... and that includes FICA (social security tax).
Simple, right? Linder has put together a list of FAQs on the Fair Tax here, so check 'em out before making any assumptions. And here is the text of the bill (H.R. 25) sponsored by Linder. With 60 sponsors in the House, the Fair Tax bill is the most widely supported fundamental tax reform bill on Capitol Hill.
The biggest concern I initially had was that it would be over-burdensome on those below the poverty level. But they've got that covered with a family consumption allowance. Basically, what it boils down to, is that every family would be eligible to receive a monthly sales tax rebate. The amount of the rebate would be the monthly poverty level multiplied by the tax rate. So everybody would get a rebate at the subsistence level.
I think it is a great idea. What do you think?
But I doubt it will ever get done because it makes so much sense and Congress is basically a group of horse's asses.