They also advertise it is better for everyone except those that work illegally now. Using their calculations the average middle income taxpayer would see his tax burden more than cut in half, and this is the middle income guy. And they don't see that as a red flag that there is something terribly wrong with their assumptions.
The main problem with their math is that they are assuming the 29.87% sales tax is revenue neutral. Since government has to pay the tax on its salaries, benefits and all non-education purchases, the revenue generated is not purchasing power neutral. This alone brings the sales tax rate up to 40%+ when expressed as a normal sales tax.
When you then take into account the reaction of the buying public to a 40%+ sales tax, the taxable base is likely to contract, in a number of ways: people buy used, people fix what they have, people just do without, people buy on black market, people barter, people buy through their business exemptions,...
Just a 15% drop in the taxable base due to the above would have the Fair Tax rate to 50% when expressed as a normal sales tax. Buy a $100 item, pay $150.
Look at the 8% price drop that I and others have estimated that could be possible by eliminating the employer half of FICA, and corporate tax on profits, and compliance costs--that 8% price drop if realized would contract the taxable base by making the same # of units sold cost up to 8% less.
On the other hand, they say that one pays taxes embedded in the price of the products now, so those wage tax dodgers are paying taxes.
Everyone benefits, of course! Lets look at homeowners. The first time after FairTax is implemented it seems that there will be a tax due on the sale of one's home. Who pays it? Why the current homeowner who cannot sell his home for more than the market, and so must absorb the tax. The next owner can turn around and sell at the same price because the house can now trade without the FairTax being applied. Every homeowner may go underwater with their mortgages the day FairTax is implemented.
"They also advertise it is better for everyone except those that work illegally now. Using their calculations the average middle income taxpayer would see his tax burden more than cut in half, and this is the middle income guy. And they don't see that as a red flag that there is something terribly wrong with their assumptions. "There is no "red flag" nor is the greatly reduced effective tax rate a sign of anything "terribly wrong" except for the terribly wrong income tax laws which impose the very much higher effective tax rates under which we live. If you had done as many comparative purchasing price studies as had the FairTax supporters you would not be surprised at all by the results. They are quite realistic and for you to believe that a middle class taxpayer can not or should not have his tax burden greatly reduced shows your clear bias toward the income tax system which you have admitted you prefer.
"The main problem with their math is that they are assuming the 29.87% sales tax is revenue neutral."
As the present paper definitively shows the 23% tax inclusive rate is quite realistic. The "main problem" (as you phrase it) is that you prefer the income tax system since obviously you think you benefit from it in some fashion.
And the 23% rate is carefully derived as shown in the paper and includes the government non-educational gross wages which are taxed at the 23% rate used in the paper. In contrast to your claim of this alone boosting the rate to "40%+", it does not boost the rate at all but in included within the 23% rate derivation. In short your analysis is gravely flawed; in fact, completely untrue.
The remainder of your post attempting to hike the rate even beyond the already-shown-to-be-lfalse "$40%+" is equally and completely unfounded nor have you and definitive data to support it.
The price decline with the removal of income tax has been stipulated to as 9% by your compatriots. If you wish to claim 8%, that's fine since it makes little difference in the comparative purchasing price comparisons that we have done. We continue to use the 9% figure since many FairTax supporters believe it will actually be greater.
In any event, though