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The NRST/FairTax is indeed a sales tax -- it is imposed/collected at the point of retail sale. If you choose to save or invest part of your paycheck, you would pay no taxes on it.

Well, you're introducing information not in the original essay, as are those who introduce exclusions based on some threshold of income, but I'll accept those for continued discussion.

However, just what is being sold? If I have sold my time and expertise, then my paycheck is my sale price. Just because I choose to invest that rather than consume it doesn't change my sale price. What I do with the money makes it an income issue, not a sale issue since that sale is complete when I provide it and am paid, not when I decide what to do with the income from that sale.

Let me be clear. My problem is not with a sales tax. It can indeed be regressive, but my solution to that is not to do something as bad as penalizing those who have provided a good or service someone values enough to pay for. Get rid of all income taxes - flat or otherwise.

And for sure get rid of a threshold amount before the flat tax cuts in. That makes it even more graduated than the current system. You know the vote-buying politicians will keep upping the exclusion amount anyway. Here's the point on that: Do lower income people not get to drive on the same roads as the rest of us? Is there some threshold of income where the military starts to defend you? As long as they are getting the same service, then should pay the same price for that service (at least as a percentage of income - though the only truly fair system would be the same absolute fee in dollars). Providing an income-based exclusion for the same services of government is the logical equivalent of letting lower-income people into movies for free. They get the same service and should pay a 'fair' price for that service. Besides, many of those who have low incomes are not poor. They are retired people living on their savings, or 'rich' college students. The key factor that determines if someone is poor or rich is not income, but wealth.

A straight, honest sales tax is indeed regressive since those who are poor spend a higher proportion of their wealth on retail sales items. Many of the services that taxes provide are equivalently regressive ('poor' people ride buses more than 'rich' people), so I'm not bothered by some degree of that, but I think one could make the case that are also government services that benefit those with wealth more than those without. For example, an attack on our nation will cost rich people more than poor people, at least in material terms, and so one could make the case that the military benefits them more than the poor. So my solution for that is a direct tax on wealth in conjunction with a sales tax - scaled to be revenue-neutral overall. There would still be political argument on the right balance between sales and wealth taxes, and work to prevent loopholes like moving all your money outside the country to avoid wealth taxes (all solvable, but too much for this message). That way we achieve two key things. We tax those who have the money to spend or who are 'rich' by the definition of having wealth. And we get rid of the illogical penalites on those providing a service that is valued by someone else enough to pay for it.

Bottom line, any basis for taxes is better than income taxes - truly flat-rated, falsely flat-rated due to exclusions, or straight up progressive.

"Well, you're introducing information not in the original essay."

The purpose of the article was not to introduce and fully explain the FairTax proposal. There are plenty of other sources for that. It merely speaks to the political benefits to Republicans. Actually, I'm not sure that it gets to the primary benefit, which to me is that good policy makes for good politics.

http://www.fairtax.org/

http://www.geocities.com/cmcofer/

http://linder.house.gov/

However, just what is being sold? If I have sold my time and expertise, then my paycheck is my sale price. Just because I choose to invest that rather than consume it doesn't change my sale price. What I do with the money makes it an income issue, not a sale issue since that sale is complete when I provide it and am paid, not when I decide what to do with the income from that sale.

I'm not quite sure what you are asking. Could you please clarify?