Fair Tax:

H.R. 25 introduced by Rep. Linder 1-6-2009.

Single-rate national sales tax on final retail consumptions. Business inputs are not taxed. Education tuition is not taxed.

Replaces income and payroll taxes including capital gains taxes, self-employment taxes, estate and gift taxes and the AMT (alternative minimum tax).

Required repeal within 7 years and is the only proposal that can repeal the 16th Amendment.

Fair Tax does not directly tax individuals, and privacy rights are preserved.

Non-filers and illegal immigrants are taxed when they purchase good and services for consumption. Illegals who do not have a SSN will not receive the prebate.

Abolishes the IRS. Administered by the states.

Taxpayers pay tax when they elect to consume.

  Flat Tax:

H.R. 1040 introduced by Rep. Burgess on 2-12-2009.

VAT (Value Added Tax), which taxes capital valued added at the business stage & labor valued added by a tax on wages, in addition to current payroll taxes.

Replaces personal and corporate income taxes, capital gains taxes, and the AMT. Current payroll taxes are not replaced.

Required 16th Amendment. Does not protect against coexistence of VAT and income Taxes.

 A flat tax still requires individual reporting, individual audits, and collection activities.

Unlikely the tax gap attributable to non-filers will change. Nonpayment of payroll taxes by illegal immigrants will likely remain problematic.

Retains the IRS with a reduced role.

Taxpayers are taxed on income when earned.