Grassroots support for the FairTax Act of 2005 is growing, prompting those who are afraid of it to distort the facts and engage in fear-mongering. Lets look at the truth about the FairTax:

The FairTax will replace our current federal taxes with a federal retail sales tax of 23 percent (the rate set forth in H.R. 25; not 30 percent or higher as is often reported by the scaremongers or uninformed journalists). Wages will no longer be subject to federal withholding; workers will take home 100 percent of their paychecks. The FairTax will repeal: individual income tax; alternative minimum tax (AMT); corporate and business income taxes; capital gains taxes; Social Security taxes; Medicare taxes; all other federal payroll taxes; self-employment tax; estate taxes; and gift taxes. Because the FairTax abolishes all taxes on income, it eliminates the practice of punishing productive, hard-working people and businesses.

The cost of goods and services will drop because the FairTax will remove embedded federal taxes and the cost of managing and collecting them from prices. In our competitive market, all it will take is one company to drop prices and all its competitors will follow. Removing embedded federal taxes will allow manufacturers and service providers to reduce their prices without reducing their profits.

The FairTax will be levied against all new goods and services. Nothing will be exempt, and there will be no loopholes or special interest considerations. Under the current system, you dont see how much federal tax youre paying when you make a purchase; under the FairTax, you will.

Every taxpayer will receive a monthly prebate in an amount covering the amount of tax paid on the bare necessities of life. This protects low-income people and means that no American will ever have to pay federal tax on essentials. Currently, even low-income people are paying the embedded taxes.

The FairTax will allow individuals and businesses to make financial decisions based on whats best for them without considering the tax consequences. Millions of dollars previously spent on consulting with lawyers and accountants on tax strategies can instead be invested in economic growth. The millions of hours spent preparing tax returns can be used for more productive, or perhaps just more enjoyable, activities.

The FairTax eliminates the so-called underground economy. Drug dealers, prostitutes, illegal aliens, and others who have avoided paying federal income tax will pay their fair share into the tax system through their retail purchases. The foreign tourists who come to the U.S. on vacations and business trips will continue to shop and spendand with the FairTax in place, theyll be contributing to the operation of our federal government and the funding of programs such as Social Security, Medicare, and Medicaid.

The FairTax will turn the United States into a tax haven and bring businesses and high-paying jobs back to this country.

Finally, the FairTax will create a more informed electoratesomething most politicians fear. Every taxpayer will be able to see on every retail purchase the exact amount of money he or she is sending to the federal government. What better way is there to hold politicians accountable?

For more information about the FairTax, visit www.fairtax.org.