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I don't share well. I might be order upa small portion of crow for the iffy conclusion you've drawn about SS benefit increases, but certainly not on the "not-for-profit" issue. `SEC. 706. NOT-FOR-PROFIT ORGANIZATIONS. (e) EXEMPTIONS- Taxable property and services purchased by a qualified not-for-profit organization shall be eligible for the exemptions provided in section 102. `SEC. 102. INTERMEDIATE AND EXPORT SALES. `(a) IN GENERAL- For purposes of this subtitle-- `(1) BUSINESS AND EXPORT PURPOSES- No tax shall be imposed under section 101 on any taxable property or service purchased for-- `(A) a business purpose in a trade or business, or `(B) export from the United States for use or consumption outside the United States, if, the purchaser provided the seller with a registration certificate, and the seller was a wholesale seller. `(2) INVESTMENT PURPOSE- No tax shall be imposed under section 101 on any taxable property or service purchased for an investment purpose and held exclusively for an investment purpose. `(3) STATE GOVERNMENT FUNCTIONS- No tax shall be imposed under section 101 on State government functions that do not constitute the final consumption of property or services. `(b) BUSINESS PURPOSES- For purposes of this section, the term `purchased for a business purpose in a trade or business' means purchased by a person engaged in a trade or business and used in that trade or business-- `(1) for resale, `(2) to produce, provide, render, or sell taxable property or services, or `(3) in furtherance of other bona fide business purposes. `(c) INVESTMENT PURPOSES- For purposes of this section, the term `purchased for an investment purpose' means property purchased exclusively for purposes of appreciation or the production of income but not entailing more than minor personal efforts. ------------------------------------------------------ So where was I wrong ? Puchases made by a 'not-for-profit' organization are treated exactly the same as purchases made by a for-profit enterprise in the normal course of running its business. They are not taxed. Neither do they pay tax on their employees' compensation, as shown above in the same section as the school-teachers issue. On the SS benefits issue, you seem to be interpreting that differently than I do. HR25 says that the CPI will be measured and if it has gone up, then the SS benefit will be adjusted by 23% of the rise in CPI. You assume the CPI will go up, while I do not assume that. If there is no increase in CPI then I am right and you are wrong. If it goes up the full amount of the FairTax rate, then you are right and I am wrong. If it goes up some, but not the full amount of the FairTax rate, then neither of us is right or wrong. So it isn't time to order up the crow yet on that issue.

So where was I wrong ? Puchases made by a 'not-for-profit' organization are treated exactly the same as purchases made by a for-profit enterprise in the normal course of running its business.

The not-for-profit is eligible for the exemptions in Sec. 102. To get them their purchases must be "for resale; to produce, provide, render, or sell taxable property or services; or in furtherance of other bona fide business purposes." Basically, a nonprofit doesn't have any "business purposes" so to not pay the FairTax, their purchases must be for resale or to produce taxable property or services.

If you don't believe me, go to the "national FairTax rate calculation" in this FairTax.org document. Line 1 shows $7,760.billion in "personal consumption expenditures" coming from the NIPA tables. Now go to the NIPA Personal Consumption Expenditures by Type of Expenditure table for 2003. The $7,709 billion in Line 1 is the same as FairTax.org's $7,760 billion but it's been adjusted. Line 108 has $206.7 billion listed for "Religious and welfare activities." This number is in the FairTax base. The footnote to this line states:

"For nonprofit institutions, equals current expenditures (including consumption of fixed capital) of religious organizations, child day care services (excluding educational programs), social advocacy organizations, human rights organizations, civic and social organizations, residential mental health and substance abuse facilities, homes for the elderly, other residential care facilities, social assistance services, political organizations, museums, libraries, and grantmaking and giving services. The expenditures are net of receipts--such as those from meals, rooms, and entertainments--accounted for separately in consumer expenditures, and exclude relief payments within the United States and expenditures by grantmaking foundations for education and research. For proprietary and government institutions, equals receipts from users."

The expenditures of nonprofit organizations is in the FairTax base and is assumed to be taxed by the AFT. One of the stated purposes of the FairTax bill is "to tax all consumption of goods and services in the United States once, without exception, but only once." Suppose a charity buys a can of soup and serves it to a homeless person (he consumes it), how is the consumption of that good (the soup) taxed if the charity doesn't pay the FairTax when they purchase the soup?