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Editor's Note: This column reports on significant bills introduced in the 1st Session of the 111th Congress. Bills are listed in chronological order, based on date of introduction. New material is indicated in bold italics, and the column is current as of January 13, 2009.
Bill No.: H.R. 25
Name: To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States ("Fair Tax Act of 2009")
Sponsors: Linder (R-GA) and 39 co-sponsors
Action: Introduced in the House of Representatives on January 6, 2009.
Effective Date: January 1, 2011 (except as otherwise provided in the bill).
Provisions: This bill would repeal the current income, payroll, and estate and gift taxes, and replace them with a national sales tax levied on the use or consumption in the United States of taxable property or services. A sales tax rate of 23% would apply for the 2011 taxable year, and for taxable years after 2011 the sales tax rate would be the sum of a general revenue rate of 14.91%, the old-age, survivors, and disability insurance rate, and the hospital insurance rate.
The tax would generally apply to the person using or consuming taxable property or services in the United States. No tax would be imposed on property used in a trade or business or purchased for export/ use outside the United States. In relevant part, the tax would apply to foreign persons having U.S.-source income at a 23% rate, collected through withholding by the U.S. payor. No withholding tax would be required on interest paid on portfolio debt investments. The rate of withholding tax could be reduced pursuant to an applicable income tax treaty. In the case of foreign financial institutions, taxable income would arise where the customer is a resident of the United States.
Bill No.: S. 31
Name: To amend the Internal Revenue Code of 1986 with respect to the proper tax treatment of certain indebtedness discharged in 2009 or 2010, and for other purposes
Sponsors: Ensign (R-NV)
Action: Introduced in the Senate...