#FairTax policy is good policy. Why @FairTaxOfficial means restoring "freedom and dignity of the individual" (as well as creating a "fairer" tax system). Imagine a world where #Americansabroad were no longer #GILTI and @citizenshiptax would be meaningless. https://t.co/NgjktVL4wu
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) June 30, 2022
I was recently introduced to the “Fair Tax“. My introduction to the “Fair Tax” was enhanced by the opportunity to host Jim Bennet and Steve Hayes as guests on my podcast. I encourage people to listen to these podcasts here, here and here. You will appreciate the character and commitment of Mr. Bennet and Mr. Hayes.
In simple terms, the “Fair Tax” would replace Subtitle A (Income Tax), Subtitle B (Estate and Gift Tax) and Subtitle C (Employment Tax) of the Internal Revenue Code. These Subtitles would be replaced with one National Sales Tax (currently proposed to be 23%). A general description of how the Fair Tax is envisioned to work is available here. Because the U.S. would no longer be trying to exercise tax jurisdiction outside the United States, it would no longer have to be concerned with the complex rules of international tax, no longer have GILTI and Subpart F rules and U.S. citizens would be free to live outside the U.S. without having the problems of having to comply with two tax systems.
(Notice this means that the U.S. would be taxing ONLY domestic consumption. The U.S. would no longer be taxing income driven by events outside the United States. Because the U.S. would be taxing activity ONLY in the U.S., it would have a “territorial tax system“.)
The purpose of this post is to argue that the adoption of the “Fair Tax” is both better tax policy, but also tax policy that is consistent with the nurturing and growth of a nation that believes in (to borrow the language of Ronald Reagan) the “freedom and dignity” of all Americans. By “all” Americans, I mean Americans who live inside the United States and those who live outside the United States.