The bicameral law making body of the federal government of United States have issued a bill that caters towards altering the taxation laws to replace the bureau of the national treasury of United States, the Internal Revenue Service. So, in essence, what is fair tax code exactly? Through this code, the taxation department of the federal government of United States aims to replace:
Moreover, the fair tax code also requires that on a monthly basis, payments should be made by the citizens or legitimate foreign residents in the form of a beforehand partial fund on the procurements up to the poverty level.
What is fair tax code? Or what are the benefits of this code?
Those people who are staunch proponents of fair tax code, also called as consumption tax, are of an opinion, that this code has constructive impact of the economic wellbeing of United States. Some of positive impacts are:
Through the fair tax code, there will be a rise in the levels of funding the federal government of United States provides to the public sector through cost transparency. Moreover, the proponents of the fair tax code also adhere to the fact that this code will definitely contribute towards to propagation and safeguarding of civil rights and protect the ecological framework of the United States. Most importantly, through this code, the federal government will enjoy the benefit of taxing the illegal criminal activities and illegitimate migration of people.
It should be noted that as the code tends to eliminate the levied taxes on income, in this respect tax deductions would cease to have any meaning. This is the leading concern among the policy makers of US because the additional income earned by individuals would not be taxed and the motive of social incentive will be lost.
In addition to that, the code also arises concerns regarding the annulment of the Sixteenth Amendment, the impact the code might have on the income tax framework, after-tax saving and enticements for credit use. Due to this code, the state and municipal bonds would no longer enjoy any sort of advantages from taxations.
The point of conflict
The main point of debate arises when the relationship between fair tax code and the distribution of tax burden is taken in to consideration. So, if the question arises that what is fair tax code and how it will benefit the taxpayers, the cohorts of this plan would argue on these points:
However, the individuals who are totally against the plan would claim that the Fair tax code increases the taxpayer’s average tax rate over the marginal tax rate. And as a result, the tax burdens on high income bracket individuals would be reduced.