The "Fair Tax" is 30%, NOT 23% - Americans for Tax Reform

Fair Tax proponents like to portray the plan’s national sales tax rate as 23%. In reality it is 30%, a fact acknowledged by the Fair Tax organization itself.

On the group’s website in the FAQ section, the 48th question in the series finally gets around to admitting it:

Question: What will the rate of the sales tax be at the retail counter?

Answer: 30 percent. This issue is often confusing, so we explain more here.

A 30% rate means that when you buy something for $100, you will pay $30 in tax at the register for a total of $130.

But the Fair Tax organization asserts that because $30 divided by $130 is 23%, voila, the rate is 23%. Nope.

And there’s more. The actual tax rate paid will be even higher.

On top of the 30% federal sales tax: state and local sales taxes.

By the time you get done paying the national Fair Tax of 30% plus state and local sales taxes, the all-in average rate at the register in most states amounts to between 35% – 40%.

Note the Tax Foundation’s 2022 State and Local Sales Tax Rates map.

Take Georgia for example. A 30% federal sales tax plus the Georgia average state and local sales tax rate of 7.37% means the customer will pay 37.37% tax. Your $100 piece of equipment is now $137.37. The Fair Tax would ravage retired Americans by double taxing their life savings. (And older Americans tend to vote)

Floridians would face a total sales tax of 37.01%. Tennesseans 39.55%. South Carolinians 37.44%. North Carolinians 36.98%.

It’s no wonder House co-sponsorship of the Fair Tax Act has been dwindling for a decade and is now at a 20-year low.