The 5 percent figure is the amount of tax that is charged on the original purchase price. That means that the final bill for the item is $105. A consumer good that carries a $100 price tag might be subject to a 5 percent sales tax. It is the parenthetical that is important, for it hides the real truth of the tax rate.įirst consider the way in which sales tax is normally figured. 25:Īmericans for Fair Taxation: A 23-percent (of the tax-inclusive sales price) sales tax is imposed on all retail sales for personal consumption of new goods and services. AnalysisĪmericans for Fair Taxation offers the following plain-language interpretation of H.R. For their objections and our response, see the end of the “Analysis” section. Update June 14: In a letter, Americans for Fair Taxation wrote to say that it disagrees “very strongly” with FactCheck’s analysis of the FairTax.
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