[pigdog]

I think you'd find that most FairTax supporters on these threads believe that the employee would get his entire non-federal withholding paycheck and that prices would decrease somewhat due to the removal of income tax and costs associated therewith. The FairTax would then be imposed at the effective FairTax rate (not the marginal rate) on these reduced-price taxable purchases. I doubt that any of us believe employee pay will be cut.

"... To achieve the revenue neutral aim, Joe must consume enough to transfer all of the previously witheld [sic] income and payroll taxes to the government. If Joe becomes frugal, the government has to raise the rate to restore the tax revenues to the desired level. Joe becomes even more frugal as the increased NRST rate drains more buying power ..."

In fact, the FairTax will improve the purchasing power for most taxpayers, not decrease it. This has been shown many times on these threads using actual numeric examples for a taxpayer under the present system and under the FairTax. To see a more rigorous study that shows this differently, this study is very helpful.

[lucysmom]

In fact, the FairTax will improve the purchasing power for most taxpayers, not decrease it.

But we all know, courtesy of the FairTaxers, that it is perception, not actual amount paid that matters. They argue that the full weight of the tax bite will be felt to the extent that the taxpayer will join to pressure government into responsible money management even though they are paying less (according to them) in tax.

Conversely they argue that this new awareness of the tax burden at the resister will not reduce spending, because the taxpayer will have more money to spend.

It is the FairTax paradox.

[Myrddin]

Until the 16th amendment is repealed a national sales tax isn't going to fly. People are not going to tolerate it unless the income tax is irrevocably killed. Even so, I still doubt the NRST will provide the revenue neutral replacement envisioned.