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How does the FairTax affect illegal immigration?

The FairTax replaces the federal income and payroll tax system with a national retail sales tax plus a prebate which makes spending up to the poverty level tax free. This means that those living at the poverty level will pay a FairTax rate of zero percent. A person spending twice the poverty level would pay a spending tax rate of 11.5 percent; a person spending three times the poverty level would pay an effective rate of 17.3 percent, and so on. 

The FairTax will, for the first time, tax undocumented workers who now evade U.S. income and payroll taxes. Under the FairTax, all persons living in the U.S. pay taxes, whether they are here legally or illegally.

Under our current tax system, many non-citizens do not pay income and payroll taxes, even though they are here earning wages and are legally required to do so. They may also be receiving benefits in the form of health care, education, roads, and much more. Under the FairTax, both lawful and unlawful residents will pay taxes when they purchase goods and services for consumption here; however, only lawful residents are eligible to receive the FairTax prebate which effectively eliminates taxes on spending up to the poverty level. 

Unlawful residents will be paying a rate of 23 cents on every dollar spent since they are not eligible for the FairTax prebate. The only way to get the prebate and not pay taxes on the purchase of essential goods and services is to become a lawful resident. In this way, the FairTax helps promote legal immigration by ensuring that only lawful residents receive the prebate. It also ensures that unlawful residents contribute to the cost of providing services they receive.

The FairTax brings jobs back to America by allowing companies to operate on our soil tax free rather than paying the current corporate income tax of 35 percent. Under the FairTax, various economists have predicted higher economic growth ranging from 7 to 14 percent over the current system, more jobs, and higher wages. Such growth will create jobs for American citizens and legal immigrants.


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