Growing on the minds of many Americans, the ever increasing deficit is becoming a huge issue for the country. Even if we taxed incomes at 100% for those making over $100,000 it would not even pay this years deficit spending...we need a new plan.
The FairTax (a 23% national retail sales tax) is revenue neutral, thus it funds the government at its current level...so current spending rates are covered without having to cut any services.
Social security and Medicare are fully funded under this plan, so un funded liabilities are also addressed.
Under the FairTax the economy can grow tax free and thus businesses can create more jobs and thus unemployment will decrease (you'd have to hide not to be able to get a job in this kind of economy)...so in the long run people have more money and thus consumption increases.
Revenues to the government increase, so if we can get a hold on spending we can add the increasing revenue to the deficit and lower the national debt.
Understand however that the FairTax does not directly address anything other than the replacement of the way the federal government generates revenue, but indirectly it will increase revenue without hurting the poor, without over taxing the middle class and the wealthy see an increase in their tax rate but this does not hurt their productivity so the economy is not affected.

We get this question and point in opposition to the FairTax a lot and the simple answers is, we're not!
The FairTax is progressive, not regressive like a standard sales tax.
The 'prebate' is what accomplishes this but un taxing everyone up to the poverty level.
The following graph shows the progressive tax rates based on your income and if you spent 100% of it.

Full details on the prebate can be found in 'The Prebate Explained'

Yes that is correct. Study after study show that any tax on consumption would effect the poor most of all. The creators of the FairTax took this into account and thus was born 'The Prebate'. No American household will pay taxes up to the federal poverty level.
So why a consumption tax will effect the poor, they can continue to live tax free unless they want to buy more goods in which case they either buy new and pay taxes or buy used and pay no taxes. But take into account they are also taking home their whole pay check on top of this.

This is a great question as everyone's paycheck is a little different.
In some states there are state income taxes so state taxes will be taken out until the state reforms their own tax code. However all other items taken out are at the request of the worker. Benefits, 401k, additional insurance etc...so while other items are taken out...they are at the control of you the wage earner.
As for state income taxes ....these are calculated on federal tax tables....and once they don't exist changes at the state level will have to happen.
State level FairTax plans are already in the works for some states.

The underground economy is the economy that goes on all around us, but does not comply with the federal tax code.
Drug dealers, pimps, prostitutes etc who make money yet pay no taxes on that income.
But most of these people drive flashy cars, have nice clothes and fancy homes right?
Let's move forward and look at these people under the FairTax. They bought the flashy cars, houses and clothes and paid the FairTax on every item without being able to avoid it (unless the business was also breaking the law. Would a high end clothing store or car dealership risk their business for one sale?)
Add on top of this illegal aliens ...workers who are paid cash under the table are also not paying into the system. This is the underground economy!
In addition (while we don't call them part of the 'underground economy') those who pay their taxes but make honest mistakes and don't pay enough...this accounts for billions of dollars every year.
Call the IRS 5 times with the same question, you'll get 5 different answers.
The current tax code makes criminals out of honest Americans.

Americans for Fair Taxation (AFFT) was founded in 1994 by three Houston businessmen, Jack Trotter, Robert C. McNair, Bob McNair, and Leo Linbeck, who each pledged $1.5 million as seed money to hire tax experts to identify what they perceived as faults with the current tax system, to determine what American citizens would like to see in tax reform, and then to design the best system of taxation.The three went on to raise an additional $17 million to fund focus groups with citizens around the country and tax policy studies.

Some of the experts funded include:

• Professors David Burton and Dan Mastromarco, University of Maryland and The Argus Group
• Lawrence Kotlikoff, Boston University
• Stephen Moore, The CATO Institute
• Professor Dale Jorgenson, Harvard University
• Bill Beach (economist), The Heritage Foundation
• Jim Poteba, The National Bureau of Economic Research
• Professor George Zodrow, Rice University and , The Baker Institute for Public Policy
• Professor Joseph Kahn, Massachusettes Institute of Technology