The Fairtax is actually 29.87% when expressed as a normal sales tax. Buy a $100 coat from your savings, you pay $129.87. Since domestic-produced goods prices might come down a bit (I estimate as much as 8%), today's $100 coat would be $92 shelf price, and then you add the 29.87% tax and the coat costs $119.48. If the coat is made overseas, then the savings will be less and the coat will likely cost more.
So, the day before the FairTax is enacted your savings buy you the coat for $100. The day after those same savings will buy the same coat but it will take $119.48.
But they will put every American on the dole at the same time, so you get a monthly welfare check (they call it a prebate) that is yours whether or not you buy any taxable items, and regardless of the amount of FairTax you pay. This wonderful new entitlement program will ba larger on Day 1 than social security or medicare.
The other surprise is that the FairTax rate will actually be a lot higher because people will react to such a high sales tax rate by curtailing their consumption of taxed goods in many ways.
And as a bonus!!!...
Since state and local governments also pay the 29.87% on every one of their non-education purchases, salaries and employment beenfits, they'll be needing to raise your state and local taxes to come up with the new tax dollars they need to send to the FedGov.
Sounds great, doesn't it?
Funny, all this talk about how the fairtax removes embedded tax. By charging tax to nonpersons like State and local government and charities, the fairtax is actually embedded in those items now. You must pay the state and local taxes and you must give your favority chairity or church more to accomplish the same thing. People pay taxes, not entities.
"... today's $100 coat would be $92 shelf price, and then you add the 29.87% tax and the coat costs $119.48 ..."
Untrue. The "$100 coat of today" (for which you'd have to have earned more than $114 if you had a 12.5% income tax rate) would fall to $91 (the other FairTax opponents have stipulated a 9% price decrease with income tax removal). You would then pay the $91 cost of the coat plus the FairTax at your own effective FairTax rate - which would almost always be greatly less that the effective income tax rate.
At the income tax rate cited above, your FairTax effective rate would fall to something like 7.82% making the "$100 coat" would be about $98.75 under the FairTax.
It is misleading in the extreme to use the marginal FairTax rate as though that is the cost of things under the FairTax. It isn't ... as you can see by the price of the coat.
Also, there's no "dole" or welfare. The prebate is a rebate of some part of taxes paid and so defined in the bill. It is not an entitlement. In fact the amount of money involved with the prebate is LESS that the two present large entitlements (S/S & M/C) and that amount is covered by the 23% revenue neutral rate.
As prices are lowered by the FairTax and most taxpayers have more takehome pay (disposable personal income), it's hard to think that consumption will do anything but increase, not decrease.
"Since state and local governments also pay the 29.87% on every one of their non-education purchases, salaries and employment beenfits, [sic]"
Another misstatement of fact refuted many times on these threads - as shown by the detailed economic study of the lead in post since the rate will not be 29.87% but 23% and in fact it will be reduced by the government's no longer having to pay the ER FICS - the employer's portion of income tax at 7.65% and also by the educational portion of ER FICA so the actual rate which is 23% of gross wages will actually be reduced by these two ER FICA savings.
Ignore the scare tactics. The sky is not falling!!!