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Does Fair Tax = National Retail Sales Tax

  • Oct 10, 2014 | Gail Cole

 Georgia Peach.

There is a movement afoot in Georgia to abolish federal income and payroll-based taxes and implement a national retail sales tax.

According to Georgia for FairTax, a nonpartisan organization that supports a national retail sales tax, “The idea is to reinvigorate the economy while providing some much needed economic stability.” Under this organization’s plan, existing state sales tax authorities would administer the national retail sales tax.

In addition to abolishing federal personal and corporate income taxes, the FairTax seeks to eliminate:

  • Alternative minimum taxes
  • Capital gains taxes
  • Estate taxes
  • Gift taxes
  • Self-employment taxes
  • Taxes on Social Security and Medicare

Georgia income tax rate cap

Georgia voters are not yet being asked to approve or reject replacing federal income and payroll taxes with a national retail sales tax. However, on November 4, 2014, they will be asked to vote on Amendment A, which would “prohibit the state from increasing the maximum state income tax rate above that in effect on January 1, 2015.” That rate is 6%, unless a special session is called before the new year to adjust it.

According to Governing.com, the idea has “strong popular support.” 57% of polled voters support a cap on state income tax. More telling still, “the cap has majority support across all age groups, men and women and both major parties.”

Neighboring Florida doesn’t tax income. The income tax rate in Alabama is 5% and Tennessee “only applies its 6 percent tax rate to investment income.” South Carolina is the outlier, with a top income tax rate of 7%. Compared to all 50 states with income tax, Georgia is middle of the road, not the highest or the lowest.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.