 The FairTax is a proposal to reform the federal tax code of the United States . It would replace all federal income taxes ( including the alternative minimum tax , corporate income taxes , and capital gains taxes ) , payroll taxes ( including Social Security and Medicare taxes ) , gift taxes , and estate taxes with a single broad national consumption tax on retail sales . The Fair Tax Act ( H.R. 25 / S. 155 ) would apply a tax , once , at the point of purchase on all new goods and services for personal consumption . The proposal also calls for a monthly payment to all family households of lawful U.S. residents as an advance rebate , or " <unk> " , of tax on purchases up to the poverty level . First introduced into the United States Congress in 1999 , a number of congressional committees have heard testimony on the bill ; however , it has not moved from committee and has yet to have any effect on the tax system . In recent years , a tax reform movement has formed behind the FairTax proposal . Attention increased after talk radio personality Neal Boortz and Georgia Congressman John Linder published The FairTax Book in 2005 and additional visibility was gained in the 2008 presidential campaign . 
