[Prime Choice]

I happen to think it is important to make sure that this FairTax plan is accurately debated.

Naturally, you will be mobbed and maligned by the Kool-Aid drinkers who live under the illusion that taxing items at 23+% (for starters) won't have a negative effect on purchases. And they also think it won't create a burgeoning black market.

They'd just as soon want you to forget that the "fair tax" notion has been run before and consistently discovered to be an abysmal failure. But they're willing to risk tanking the U.S. economy for a regressive tax scheme. What cretins...

[frdalesmith]

"Naturally, you will be mobbed and maligned by the Kool-Aid drinkers who live under the illusion that taxing items at 23+% (for starters) won't have a negative effect on purchases. And they also think it won't create a burgeoning black market."

Of course a 23% tax will have a negative effect on purchases. However, more income will have a positive effect on purchases. If prices do not fall beyond the embedded costs for corporate taxes and compliance costs, employees will bring home their current gross pay.

A black market already exists, one of income. Under the FairTax, a black market for income becomes unimportant. The black market for purchases would become important. However, the black market for purchases would be easier to police since there are fewer retailers than employers.


"They'd just as soon want you to forget that the "fair tax" notion has been run before and consistently discovered to be an abysmal failure. But they're willing to risk tanking the U.S. economy for a regressive tax scheme. What cretins..."

Chile currently has a consumption tax and its economy is very good. Argue all you what about the regressivity of the FairTax. But you'd be wasting your time because the FairTax is progressive. Regressive means that the tax rate decreases as the tax base increases. Under the FairTax, the tax rate for someone spending at the poverty level (let's assume $10,000) is 0% since the prebate returns all taxes paid. Someone spending $20,000 would only pay an effective rate of 11.5% ($2,300 divided by $20,000). Someone spending $30,000 would only pay an effective rate of 15.3% ($4,600 divided by $30,000). Someone spending $100,000 would pay an effective rate of 20.7% ($20,700 divided by $100,000). From this, it is obvious that the effective tax rate goes up as spending goes up. Therefore the tax cannot be regressive.