The FairTax, on paper, sounds simple: just replace all major sources of the federal government’s revenue—the individual income tax, corporate income tax, estate and gift taxes, and payroll tax—with a national sales tax.

But when you pull back the curtains, this proposal leads to more questions than answers.

Alan Cole, senior economist, makes his Deduction debut to talk us through why this old idea is gaining attention this year. He breaks down what the FairTax shows us about the debate between income taxes versus consumption taxes, and why “simple solutions” appeal to so many policymakers for how best to tax an increasingly complex economy.

Links:
https://taxfoundation.org/fair-tax-national-sales-tax/
https://taxfoundation.org/fairtax-consumption-taxes/
https://taxfoundation.org/tax-basics/value-added-tax-vat/

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