Guest Commentary By Reps. John Linder and Collin Peterson The American dream has may definitions. But from farming your own land, to owning your own business, to providing a better life for your children, the American dream has always been about opportunity. We have introduced the "FairTax" to reinvigorate the dream and to ensure new opportunities for generations to come.
From years of focus groups with consumers, forums with small-business owners and application research from America's top economic minds � including professors from Harvard, Stanford, Boston University and more � we have created the FairTax.
Although we relied on economists for the numbers, we relied on the American people for the FairTax concept. Throughout the country, we found that Americans wanted a system that was fair.
Voters told us that a single rate for everyone was fair, and that there should be no exceptions and no special treatment. They told us that the system had to be easy to understand and easy to implement.
We put all of these ideas into the FairTax to create a fairer, simpler code that is revenue neutral and makes no policy decisions.
We simply abolish the federal income tax, payroll tax, self-employment tax, capital gains tax and death and gift tax and we replace them with a revenue neutral sales tax, currently calculated at 23 percent.
No exceptions. No exemptions. Just one flat tax on every retail sale.
For 85 years, our nation has struggled with the burden of the federal income tax. The federal income tax code has been manipulated to the point where you need a lawyer and a CPA just to pay your taxes.
Since the last major income tax revision in 1986, Congress has made more than 6,000 changes to the code. The American consumer has been left behind while special interest groups with Washington tax lobbyists have received special treatment.
Though less manipulated than the income tax, the payroll tax burdens most Americans even more. Amounting to 15.3 percent of every paycheck, Americans don't realize the burden because this money comes out of the paycheck before the worker ever sees it.
With the FairTax, you get to keep your entire paycheck. Each American will be free to determine his or her own priorities and opportunities.
To ensure fairness to low-income families, we include a sales tax rebate, mailed to each family monthly, allowing all purchases up to the poverty level to be made completely tax free. In this way, all of the basic necessities of life are bought without any tax burden.
And we mean "without any tax burden." Today, taxes are hidden in the price of everything you buy. Corporate income taxes, payroll taxes, tax compliance costs and more are all hidden in the price of every loaf of bread and every gallon of milk that American families bring home.
Our team of economists has calculated these hidden taxes to be an average of 20 percent of the cost of goods. By abolishing this, we lower the price of goods and more fairly distribute America's tax burden.
We protect the working family's pocketbook by ending these hidden taxes, and we protect American jobs as well.
By removing these taxes in America's production, we can compete with foreign competition on a level playing field, which means more jobs and better pay for Americans back home.
Passing this bill will be no small task, and the coming debate over whether or not it should pass will be no small debate. We are working on both sides of the aisle, on both sides of the Hill, and � most importantly � throughout all parts of the country to make this proposed change a reality.
In the short term, this bill will have winners and losers. It's tough to argue that IRS employees won't lose under our legislation.
But in the end, everyone will win, because we will have more fairness in our tax system. We will all be winners because we will have more control over our lives, because we will have more opportunities, and because we dared to imagine and then do the unimaginable for the good of everyone in this great nation.
Linder is a Republican from Georgia. Peterson is a Democrat from Minnesota.