How is the FairTax Rate Determined?

This is per ‘SEC. 101. IMPOSITION OF SALES TAX. (b) Rate – :

‘(1) FOR 2013- In the calendar year 2013, the rate of tax is 23 percent of the gross payments for the taxable property or service.

‘(2) FOR YEARS AFTER 2013- For years after the calendar year 2013, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.

‘(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of–

‘(A) the general revenue rate (as defined in paragraph (4)),

‘(B) the old-age, survivors and disability insurance rate, and

‘(C) the hospital insurance rate.

‘(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.

The GENERAL REVENUE RATE is 14.91%. That is essentially putting EVERY person in the US in the “15% tax bracket”.

The combined “old-age, survivors and disability insurance rate” (“SS”) and “hospital insurance rate” (“MC”, or collectively, the Social Security rate) is: 7.65%

Adding those up we get (14.91 + 7.65) a FairTax rate of 22.56% after the first year after implementation. In other words, we can probably expect the FairTax rate (your taxes) to decrease by 0.44% after the first year; unless, of course, SS or MC need to be increased.

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