"Why hasn't anybody thought of this before?"Excellent question ... and I really don't know but it's been "thought of" now - and in fact been extensively and intensively studied by a number of economists of which these are a few.
But to answer you oher questions ... YES, that's just what it means.
In fact, it is the most thoroughly studied and reviewed tax bill ever put before Congress.
Does this really mean I would get to take home my WHOLE paycheck and decide how much tax I paid by deciding how much to spend or save and invest?
Why hasn't anybody thought of this before?
Because, you can't be trusted with your money. The pols no so much better than you how to spend it.
You will only get to keep your paycheck until they decide they aren't getting enough tax, then they will reinstate the income tax, and leave the sales tax in place.
This has been floating around for at least 10 years. It'll never happen though because the politicians (i.e. SCUMBAGS) will not let go of the power they have to control everything via the tax system.
Middle class people spend most of their paychecks-- of necessity. The Bill Gateses of the world save and invest most of what they earn. Therefore, the rich will fare much better under this kind of tax than under the present income tax. To overcome the loss of revenue from the income taxes on the wealthy, the result will be either that the Government will have to drastically cut spending, or that the sales tax rate will wind up being very, very high. As a libertarian, I'd like to see spending drop, but, as a realist, I doubt it would.
Yep. :-)
It also means that all of the money that you have already saved after paying Federal income taxes on it will be taxed yet again with a 23% Federal tax once you decide to spend it. :-(
If you now live paycheck to paycheck and haven't saved much, it's a great idea.
If you have already saved serious after-tax money during your lifetime, it's a horrible idea unless the Fair Tax proponents address the double taxation issue instead of sweeping the double taxation issue under the rug by telling you all reasons you should not mind the fact that you were taxed once by the Feds once at 33% when you earned and saved that money in 2005 and will be taxed yet again by the Feds at 23% when you spend that saved money under the Fair Tax in 2009.