Kotlikoff before the ways and means commitee April 2000:
"Tax rates:OH boy! Where do I sign up for a temporaray rate reduction (40% instead of 43%) by paying a NEW tax on the (arbitrary) rental VALUE of my own home?Simulation analysis and a variety of empirical calculations suggest that the retail sales tax rate needed for revenue neutrality under the Fair Tax, assuming no decline in the real value of government purchases, would be roughly 30 percent when measured on a tax-inclusive basis. This tax rate could be expected to decline by 3 or so percentage points over time as the economy expands. Moreover, if the Fair Tax were structured to include the consumption of existing housing services in its tax base, the initial Fair Tax rate would probably be about 3 percentage points lower. This could be accomplished by assessing the tax on the imputed rent on housing, where the calculation of imputed rent is based on a fair market valuation of housing real estate. This valuation could be done by local municipalities in the course of appraising houses for local property taxes.
A tax-inclusive consumption tax rate of 30 percent translates into a tax-exclusive consumption tax rate of 43 percent. While the 43 percent rate sounds very high, proper comparison of the Fair Tax tax rate with the current payroll and income tax rates requires evaluating the consumption tax rate on a tax-inclusive basis. Even a 30 percent tax rate may sound like a high rate. But one needs to bear in mind that middle and upper income households in America are typically in combined income tax and payroll tax marginal tax brackets of 40 percent or more and that low income Americans are typically in even higher tax brackets once one considers the phase out of the earned income tax credit. Hence, given the state of U.S. marginal taxation, 30 percent is a low number.
"OH boy! Where do I sign up for a temporaray [sic] rate reduction (40% instead of 43%) by paying a NEW tax on the (arbitrary) rental VALUE of my own home?"
Glad you asked. Just go back to the year 2000 and live.
Isn't it interesting what 6 years can accomplish in the way of learning new information, refining formulas, and understanding costs and revenues. I've no doubt that even Kotlikoff would tell you he's learned a lot in those 6 years. But it appears you haven't since you still seem to not understand the presentations in the 2006 paper. Might help to read it?
The poster negative.
Those who stand to lose under the FairTax:
Tax shelter hucksters.
130,000 IRS employees, more than the total employment of the FBI.
The life insurance and annuity industry. They mistakenly think that without the tax-deferral their products will be harder to sell. If their products were any good they would NOT be harder to sell.
K-Street lawyers. If you have ever been to D.C. you have seen the multiple square miles of towering office buildings full of attorneys and lobbyists. Here's how it works: Some F. CAT invents a new hot water heater. He goes to his congresscrook and explains that the device will save energy AND, he will give the congresscrook SOMETHING (cash, a deal, a favor, another congresscrook's okay on something else, a block of votes, a pile of gold). The congresscrook introduces a bill that will allow everyone who buys the new water heater a tax credit. WOW!! Do you think that will help sales?
Municipal Bond Industry. These guys have a dubious past anyway.
Tax lawyers, CPA's, small time street corner instant tax jobbers who make hundreds of thousand of dollars getting people their "check".
I could go on and you can probably create a few of your own.
TAX ME WHEN I SPEND IT, NOT WHILE I'M TRYING TO MAKE IT. LET ME ACCUMULATE WEALTH. PLEASE!!!
Imputed values are subject to even more inflation than market values.