So let's see - you say that ALL federal transfers must be reduced but that federal transfers must be increased... HMMM!No. I said "the value of all government transfers, including the FairTax prebate, would be reduced by the amount of the FairTax" thus "you have to increase the nominal amount of the transfer to keep the same real value."
Seems like a disconnect there somewhere since you've shot yourself in the foot by contradicting in one part what you said in another.There is no disconnect. You just don't comprehend what I'm saying.
The alpha term can be zero in which case there is no indexing at all but in any event your claim of "all government transfers being reduced" is wishful thinking on your part.Oy! It's obvious this is way beyond your capabilities. You have not comprehension of "real" values.
You seem to have no comprehension of what 1+0 equals. In addition to that is the time frame being considered which is, in the sense we're discussing it, a year or less. We're not considering the effect spread over a decade or so but even if we were your claim would still not hold up since the indexing of the payments is precisely to allow the same purchasing power.
This is clear from the paper's statement that "... it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. ..." meaning that indeed the adjusted rate indexing is for that purpose. The entire paper is developed around real spending, not nominal.
Further the paper clearly sets out:
"In this paper, we focus on real revenue/real spending neutrality."
the entire paper and the derivations are developed around the real spending - not nominal. One reason it does this is so that there is no need to focus on the price level but the real rather than nominal spending/revenue levels.
So despite your belief the values are indeed real values made so by any required indexing and their real value is not changed.