You agree that the FairTax will cause higher prices and that these will be ok because the purchasing power is what matters. Wage earners will receive a pay increase with their 100% paychecks to compensate for the higher prices. These prices will rise about 18-20% after the price cut and then the tax addition-- the full 30% for foreign items.
Stick with me here for just one more minute. The government will also need a "raise" to pay the higher prices, and it will take the form of additional revenue that needs to be raised. That additional revenue can ONLY be raised by increasing the FairTax rate, there is no other source to raise it. So, the 23% rate when multiplied by 1.18 is now 27.1% inclusive, which is 37.2% exclusive.
And that assumes no reduction in the base. If we assume just the very minimum that the base reduces 8% due to reduction in shelf prices-- ie. no reduction in unit volume of sales, just an 8% lower price for everything, then we need to divide the 27.1% by 0.92 to get a new inclusive rate of 29.5%, which is 41.8% exclusive. And this assumes ZERO evasion, and the same exact level of unit sales as now.
Sorry again Rob. I make no such assumption. It's just that 23% is in the bill. That's why I use it. I don't really care what it ends up being as long as it's revenue neutral.
If you can show the rate is wrong (not quote Gale), have at it. I'm sure it would bring you fame and notoriety. Go for it.
If you use Gale's work without understanding his moves, you're being set up like a bowling pin.
The FEDERAL government will not need to raise taxes. They pay themselves.
I think I'll leave it to the PhDs in Economics and LLMs in taxation to help me with my calculations. That means your numbers are worthless Rob. Live with it.
Have fun with navyguy. Don't leave any marks!
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
Of course, being unable to separate tax law from law enforcement might be a major handicap for them too.