Who would argue that a 23% tax billed at 30% is fair?
When the foundation is a mirage nothing can be built upon it.
The Fair Tax is 23% on a tax inclusive basis. The tax-inclusive basis is analogous or comparable to the way we conceptualize the income tax.
The Fair Tax is 30% on a tax EXCLUSIVE basis. That is the way we typically conceptualize sales taxes. Let’s do the math to demonstrate:
If you have $1 to spend, you can buy .77 worth of goods and you will pay .23 in sales tax. On a tax-inclusive basis, that is a 23% tax. 23/100 = 23%.
On a tax-exclusive basis, where the value of the goods purchased serves as the denominator or the basis upon which the tax is calculated, the rate is 30%. 23/77 = 30%.
SAME NUMBERS, DIFFERENT ways of calculating the rate provide different results. THERE IS NO INTENT TO DECEIVE.
Let’s approach this from a different perspective. I you want to buy an item that costs $100, how much do you have to earn under the income tax system to permit you to buy the $100 item? If your marginal effective Federal Tax Rate is 23%(15% FIT, 7.65% FICA/Medicare(rough justice 8%)), the answer to that question is $130. Let’s do the math.
$130 gross x 15% = $19.50
$130 gross x 8% = $10.50(rough justice)
NET PAY: $130-$19.50-$10.50 = $100
IS that a 23% tax or a 30% tax?