The Fair Tax Act, Part LVIII
Today I’ll cover the first chunk of section 904, which details how to handle Social Security and Medicare revenue with the FairTax:
(a) Secretary To Make Allocation of Sales Tax Revenue- The Secretary shall allocate the revenue received by virtue of the tax imposed by section 101 in accordance with this section. The revenue shall be allocated among–
`(1) the general revenue,
`(2) the old-age and survivors insurance trust fund,
`(3) the disability insurance trust fund,
`(4) the hospital insurance trust fund, and
`(5) the Federal supplementary medical insurance trust fund.
`(b) General Rule-
`(1) GENERAL REVENUE- The proportion of total revenue allocated to the general revenue shall be the same proportion as the rate in section 101(b)(4) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(2) The amount of revenue allocated to the old-age and survivors insurance and disability insurance trust funds shall be the same proportion as the old-age, survivors and disability insurance rate (as defined in subsection (d)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(3) The amount of revenue allocated to the hospital insurance and Federal supplementary medical insurance trust funds shall be the same proportion as the hospital insurance rate (as defined in subsection (e)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(c) Calendar Year 2009- Notwithstanding subsection (b), the revenue allocation pursuant to subsection (a) for calendar year 2009 shall be as follows:
`(1) 64.83 percent of total revenue to general revenue;
`(2) 27.43 percent of total revenue to the old-age and survivors insurance and disability insurance trust funds, and
`(3) 7.74 percent of total revenue to the hospital insurance and Federal supplementary medical insurance trust funds.
So this section defines a starting point for how the FairTax will be divvied up into Medicare, Social Security and General Revenue, keeping proportions roughly the same as they are today. It also strives to maintain that proportionality for future years after passage.
