[elkfersupper]

The mechanism for establishing the optimum Fair Tax rate is actually pretty simple, if one could rely on politicians to actually do their jobs and act on the merits.

You just establish an arbitrary beginning rate, then lower it periodically until revenue to the Treasury actually falls.

That would be the optimum rate, as it would be under the current tax code.

But we can't rely on politicians to do that.

Although there is no need for it to begin with, the same thing could be done with the minimum wage. Just establish one, then index it to inflation.

This would take the political football out of the game, and we could then cause our politicians to focus (maybe) on more serious and consequential things (or further enslave us with things like Twinkie taxes, as the case may be).

[RobFromGa]

The problem with your thinking is that the FairTax rate is calculated to generate the required amount of revenue-- not to maximize revenue.

My contention is, and has been, that the optimal FairTax rate will not collect enough revenue, and they will be forced to raise it which will actually drive more transactions underground or eliminate them, and will generate less revenue.

When that happens, they reintroduce the income tax as an emergency measure on the productive and we have the worst of both worlds.