WASHINGTON--The bill is called the "FairTax Act." if passed by congress and signed by the president, the bill would replace all federal income and payroll taxes.
Under the proposed system, each state would adopt one federal retail sales tax or what's being called a "consumption tax." That means consumers would only be taxed on goods and services and not on their annual income.
This would allow retirees and workers to keep their entire pensions and paychecks.
"Right now, we're paying 30 cents on every dollar we earn. And with the FairTax, we'll pay 23 cents on every dollar we choose to spend. The government is not going to have their hands in our back pockets anymore," says Jamie Wheeler, Coordinator for "Americans for Fair Taxation."
As of late September, 66 members of the U.S House of Representatives have co-sponsored the bill for the FairTax plan. There are currently no sponsors in Washington.