A New Tax Reformation In American-the Research And Theoretical Analysis Of Fair Tax

During a long period of time, the United State tax system is followed and researched by numerous countries in the world. It is well known that the United State tax system is based on the Federal income tax system, which is one of the proudest boasts of US government that restricted the development of the American economy in recent years. Federal income tax system is famous for its systematic and strictness of its management of course, on the other hand, you can imagine how complicated and difficult to understand it was. The populace cried against the income tax based system which exposed the injustice and lack of efficiency.Since the American financial crisis outbreaks in 2008, huge budget deficits and the Federal Reserve's leap into quantitative easing have foreigners fretting over the longer term health of the dollar. Aimed to revive the economy, the Treasury will match private capital with remaining Tarp money to capitalize funds for purchasing assets from banks– both securities and conventional loans turned sour by the deepening recession but no significant achievement as imagined. In the view of the questions of the existing tax system, numerous tax reform bills appeared. During these bills, John Linder, the Senate councilor of Georgia, submitted a reformation bill to the joint houses of Congress (the House No. 25/the Senate No.25) on January 4th, 2007. It proposed to levy the Federal Retail Sales Tax which is single tax rate, and abolished all the other taxes, including the Federal income tax and individual income tax etc. Due to the radicalness of the tax reform bill"Fair Tax", it is not won wide support in the American society, but it caused the reflection on the American tax system by the theorists and the American government. The point of the 1986 tax reform is"Lower tax rate, Widen tax base, Clear tax preferences, Simplify tax system", and this is just the ideology"Fair Tax"contains. Combining the economic environment of US, this thesis demonstrated the theory basis, economic effect and feasibility of"Fair Tax"in terms of economic theory.