NCPA - National Center for Policy Analysis

Replacing Income Taxes With A National Sales Tax

July 23, 1999

A Houston group called Americans for Fair Taxation is launching a drive to abolish all income, corporate and payroll taxes -- along with the Internal Revenue Service and the chaotic federal tax code. They would be replaced by a 23 percent national sales tax.

The group already has 200,000 members and is seeking 800,000 more. It also wants to attract $20 million in donations to finance its campaign.

  • The plan would also repeal capital gains taxes, self- employment taxes, estate taxes and gift taxes -- as well as get rid of the 16th Amendment to the Constitution.
  • It would give each household an annual rebate "equal to the sales tax paid on essential goods and services" -- amounting to $1,815 a year for one-person households, and $625 for each additional person.
  • The bipartisan group claims that extensive polling has established that 85 percent of people are for the idea.
  • Retailers, however, are lining up against it, since it would shift the burden of collecting taxes to them.

The AFT initiative has the backing of Rep. John Linder (R-Ga.) and Rep. Collin Peterson (D-Minn.). "We understand that Washington will never embrace this until the public does," Linder says. So AFT will promote what it calls the "Fair Tax" through billboard ads, local radio spots, and TV commercials.

Source: Joseph Guinto, "Sales Tax Gets Another Boost," Investor's Business Daily, July 23, 1999.


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