Frequently Asked Questions

FairTax.org's senior strategist Denis Calabrese responds to frequently asked questions about the FairTax. Click on the question to see the video clip of the answer.

FairTax Basics
What is the FairTax?
How will the FairTax be collected?
Does the FairTax plan repeal the income tax?
Will the FairTax tax services, which have not been taxed before?
Is education taxed under the FairTax?
How do we keep continual exemptions and exclusions from undermining the FairTax?
Is the tax rate for the FairTax really 23%?
Is consumption a reliable source of revenue?
What will the transition be like from the income tax to the FairTax?
How will used goods be taxed?
Does the FairTax protect privacy, taxpayer rights and other civil liberties?
Are any significant economies funded by a sales tax?
Is the FairTax truly progressive?

FairTax Prebates Explained
How do the "pre-bates" work?
Will the prebate create a massive new entitlement system?
Is it fair for rich people to get the same prebate as poor people?

Impact of the FairTax
What is the impact of the FairTax on business?
How does the FairTax impact retailers?
How will the FairTax impact seniors?
How does the FairTax impact the middle class?
How does the FairTax affect the economy?
How does the FairTax impact interest rates?
What will happen to tax-free bonds?
What will happen to entities that depend on tax-free bonds?
Will the FairTax hurt home ownership because of the loss of the mortgage interest deduction?
How does the FairTax impact charitable giving?
How does the FairTax impact savings?
How does the FairTax affect compliance costs?
Will I be able to pretend I am a business in order to avoid paying sales taxes?
Do corporations get a windfall tax break under the FairTax?
How will the FairTax impact tax-deferred retirement accounts like 401(k)'s?
How does the FairTax affect illegal immigration?
How will state tax systems be affected by collecting a federal sales tax?
Will the FairTax drive the economy down if people stop buying?
If people bring home their whole paychecks, how can prices fall?

Fairness and the FairTax
Will the FairTax lead to massive cheating in an underground economy?
Will bartering present a compliance problem under the FairTax?
Can't Americans just cross the border to avoid paying the FairTax?
Wouldn't it be more fair to exempt food and medicine from the FairTax?
How can you tax life-saving medical treatment?

Social Security, Medicare and Government Spending
What will happen to Social Security, Medicare and similar programs?
Since Social Security is based on income, how will it work under the FairTax?
Will government pay taxes when they buy things under the FairTax?
What assumptions does the FairTax make about government spending levels?

FairTax vs. Other Tax Reforms
How is the FairTax different than a Value-Added Tax (VAT)?
Why is the FairTax better than other reform efforts?
How does the FairTax rate compare to today's tax rate?
Why is the FairTax better than a flat tax?

Accountants, the IRS and the FairTax
How will the FairTax help people who don't hire an accountant?
How will the FairTax affect people who don't file income tax returns?
Isn't it a stretch to say that the IRS will go away?
How does the FairTax affect tax preparers and CPAs?