The economic boom from the fair tax would not really come from taxes that Americans pay. As demonstrated, that would be basically a wash. The boom comes from imports. The US imports a huge amount. As the system is today, the import competes price wise with the domestic product which has the embedded taxes. When the import item is sold, that embedded tax equivalent is shipped out of the country as an added bonus to the overseas producer. With the Fair tax the imported product must compete with the domestic product at a price that does not include embedded taxes and the importer losses the bonus while still incurring the added costs of transportation and handling.
The net effect would be to spur domestic production of goods and services. Since we realistically would still import heavily, stopping the flow of embedded tax equivalent out of the country would be like "tax gravy" to the federal government. Just look at our current trade imbalance and picture 22% of that flowing into the Federal government. Goodbye budget deficits. I was a flat tax man until I carefully examined the system and came to this realization. This aspect of the Fair tax must be hammered home to people because it has such a potential impact on our domestic economy and is the real way to protect jobs in America.
The boom comes from imports. The US imports a huge amount.
Actually a boom in exports, according to Jorgenson an increase of over 26% in exports, accounts for a lot of the high production increase in first year of implementation.
Get rid of the drag of the income/payroll tax system on manufacturers, exporters, and other upstream businesses by repealing it and not levying a tax on purchases for business use, US exports would take off like a rocket in the initial years of the tax reform. That of course is in addition to the domestic sales vs import side of the picture where imports compete with domestic goods with the same burden of U.S. taxes in the domestic retail market.