The idea of the “fair tax law” in 2003, that is, the idea of replacing income tax with sales tax, is not a new concept. Federal sales tax is widely used in other countries around the world, and because of the lower tax burden, the federal government can at least get enough income from sales tax to completely replace federal income tax. One of the biggest changes to the national sales tax system is to change people’s work and consumption behavior. People respond to incentives, and tax policies change the incentives for people to work and consume. It is unclear whether the replacement of income tax with business tax will lead to an increase or decrease in consumption within the United States. There will be two main and opposing forces at work: because income is no longer taxed like the national sales tax system like FairTax, the motivation for work changes. One consideration is the impact on workers’ overtime hours. Many workers can choose the overtime hours for their work. For example, if he works overtime for an hour, he can earn $25. If, according to our current income tax law, the marginal income tax rate for his extra working hours is 40%, he will only deduct $15 from the $25, because $10 will be used for his income tax. If the income tax is cancelled, he will retain all $25. If the one-hour free time is worth $20, he will work for an additional hour under the sales tax plan, but not under the income tax plan. As a result, changes to the national sales tax program have reduced the inhibitory effect on the job, and the entire worker may eventually work and earn more. The Fair Tax Movement, represented by the 2003 Act, proposes a plan to amend the “Domestic Tax Law” to abolish subtitle A, subtitle B and subtitle C, or income, inheritance and gifts, and employment tax, respectively. The proposal calls for the revocation of these three areas of tax law to support a 23% national sales tax. It is not difficult to see the appeal of this system. Since all taxes are collected by the company, private citizens do not need to fill out the tax form. We can abolish the IRS! Most states already impose sales taxes, so states can impose federal sales taxes, which reduces administrative costs. There are many obvious benefits to this change. But in order to properly analyze such a big change in the US tax system, we must ask three questions. What impact will this change have on consumer spending and the economy? Who won, who lost the national sales tax? Many economists believe that when workers earn more, they will also spend more. So the impact on income shows. Spend less and save more. Of course, today’s savings are likely to be used for tomorrow’s consumption, so consumers may just postpone the inevitable. But workers may still want to save more now instead of spending money because they may think that sales taxes won’t last forever, or they may plan to find other ways to avoid taxes in the future. Spend money outside the United States. Currently, if consumers want to shop in Canada or in the Caribbean, they have been taxed by the federal government for income levels. Under the sales tax plan, they can use their income abroad without taxing any of them unless they bring enough goods back to the United States. So we should expect to see more money spent on holidays outside the US and less on the US. Spend in a way that evades taxes. If there is a simple tax evasion method, many people will probably use it. One way to evade the national sales tax is to call your expenses “commercial expenses,” even if it is a purchase for personal use. Goods used in production, that is, intermediate goods, are usually not subject to normal sales tax. The government can make up for this loophole by using sales tax as a “VAT” (VAT) such as the Canadian Goods and Services Tax (GST). But VAT and GST are quite unpopular for the business community because they increase production costs, so the US is unlikely to want to take this path. Due to the high sales tax rate, tax evasion will be common, so this effect will result in a reduction in the expenditure of “taxable” goods.