Oh, no problem. Look at it this way....the payroll tax every single worker in US pays id based on your GROSS paycheck. You pay 7.5% and the employer pays 7.5%.
Then from your gross pay you have to pay the income tax withholding, state tax if any, city tax if any, property tax, mortgage payment, car payment, and if you are lucky you put away some of your money in savings or a tax deferred retirement plan such as 401-K or 403-B. What is left after all those expenses is what you have left to actually spend. You may call it your discretionary spending money. It is obviously lot smaller than your gross paycheck because of all those fixed expenses. But the good news is you will not be paying any federal sales tax on all those items because none of that is purchase of a NEW item.
So, the 9% sales tax will apply only to that discretionary money you might spend buying stuff. And you pay that federal sales tax only if you buy new items. A used car purchase or a buying a used house has no sales tax because it was already paid by the original buyer.
Then you add the tax savings on dividends and capital gains, and death tax on any large inheritance. So my guess is the federal sales tax will be lot lower for most people than the sum of all your other tax savings.
Best of all it will make it easier for people to get richer since income tax will be a flat 9% no matter how much money one makes.
Thank you for the cogent explanationg.
I’ve been for the Fair Tax for years, but I was concerned about a complete switch. I was hoping to see it work in a state or two, before committing the whole country. Cain’s plan really takes care of that concern for me.