Your employer pays you; but he pays isn't what you get. When the guy in the job interview offers you, say, $50K, he's calculating that hiring you will cost at least $60K -- with FICA matching, benefits, and providing you with a desk and a computer. Eliminate payroll taxes altogether, and everyone who's following the rules gets a raise. If you made $50K last year, and kept $30K, and next year you could make $45K and keep $45K, is that really a pay cut?
Price go up significantly under the fairtax after the 30% sales tax is added on the price.
Yes. Retail prices will go up. I support the Fair Tax, but I'm annoyed by some of the pie-in-the-sky projections about how incomes will go up prices will come down, and the government will get revenue handed to them by elves and faeries.
The bottom line, to use the index used by The Economist, is this: How many hours do you have to work to buy a Big Mac? Under the fair tax, a Big Mac would cost more. And you'd make more per hour, if only because you're keeping what used to be FICA tax and income tax withholding.
When I was in high school, I was gassing up my '69 Dodge Dart at $0.75 a gallon. I was making eight bucks an hour. Now, I'm paying just shy of four times as much for gas, but I'm making ... let's just say considerably more than eight bucks an hour. In my daily life, in the amount of my time it costs me, gasoline has actually gotten less expensive over the last couple decades.
I would expect the end result of adopting the Fair Tax to be a wash. It's true that economics isn't a zero-sum game, but it's also true that you can't get something for nothing. TANSTAAFL.
Where you do get more savings and better efficiency is cutting the head off of the IRS. You save most of the cost of that bureaucracy (most, not all; there will still have to be a government agency to monitor tax compliance.) You get rid of the hours every American is forced to spend shuffling papers around before April 15. You put H&R Block out of business, and send those accountants and lawyers to work figuring out how to make money rather than how to hide it.
I do not expect the Fair Tax to significantly reduce the cost of taxes -- that would require spending cuts. But I do expect it to reduce the hassle, the intrusiveness, and the arbitrary power of the federal government. I expect it to build an economy that encourages thrift and saving, rather than rewarding spending and debt. I expect it to get the camel's nose out of my bank accounts.
After that, we get to work cutting budgets to bring the rate down.
There are real advantages to the fairtax. Unfortunately, fairtax.org is not nearly that honest as you in presenting them.
Apples and oranges. To teenagers who are STILL only making $8 per hour, $3 gas is a big deal.