You gotta remember that 23% is only the marginal rate. Every American will recieve a rebate for taxes paid up to the poverty line. Let's say it's a retired couple. For a couple in 2004, it would be $18,620; that means that the couple would recieve enough taxes, $4,283, to pay enough taxes up to the poverty line. So, for this couple to pay at least 20% in taxes, they would have to spend AT LEAST $145,000 a year. ($145,000 - $18,620 = $126,380; $126,380 x .23 = $29,067.40; $29,067.40/$145,000 = 20.05%). Keep in mind that assumes ALL of their income is spent on taxable items (not used goods including a home, or savings), and it also assumes that the price of goods doesn't drop.
I know very few seniors who spend $145,000 a year.
I don't blame you for not looking at the marginal rate by not taking into account the "prebate" (Family Consumption Allowance). When I first came across the FairTax, I tohught the same thing. I'll give you a formula to figure out true tax rates:
First, the prebate is $9,310 for adults and $3,180 for children per year.
Use the following rules for the formula:
Income = I
Rebate = R
Tax Rate = T
Price Reduction (new price/old price) = P
Consumption Rate (% of income spent on taxable goods) = C
So,
(CTRIP)/I = Marginal Tax Rate
Glad to have you aboard on the FairTax.