the fair-tax would form the greatest transfer of power in American history, and would create the world's largest tax-free zone, The United States of America
Eric LaMont Gregory
The development of a fair-tax system in the United States, would foster the largest transfer of power in American history. And, at the same time the fair-tax creates a tax free zone for manufacturing. The United States would become the largest tax-free zone on this planet and every manufacturer would want to produce their goods here.
The FairTax is a single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods. Once that tax is paid, there are no additional taxes to paid on that good when it is sold on as a used item.
Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive.
The FairTax replaces federal income taxes including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes, it is not a reform of the current tax system.
How does this affect U.S. competitiveness in foreign trade?
Because the FairTax is automatically border adjustable, the 17 percent competitive advantage, on average, of foreign producers is eliminated, immediately boosting U.S. competitiveness overseas. American companies doing business internationally are able to sell their goods at lower prices but at similar margins, and this brings jobs to America.
In addition, U.S. companies with investments or plants abroad bring home overseas profits without the penalty of paying income taxes, thus resulting in more U.S. capital investment.
And at last, imports and domestic production are on a level playing field. Exported goods are not subject to the FairTax, since they are not consumed in the U.S.; but imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically.