Both, it depends on your point of reference.
In terms of a sales tax as you are used to paying, it is 29.87%. In terms of an income tax you're used to paying, it's 23%. The two tax systems use different mechanisms (tax-exclusive for state sales taxes, tax-inclusive for income and payroll taxes).
The example is easier to understand on a $100 total bill, after taxes. The pre-tax item price is $77, the tax is $23. Under the state sales tax model, the tax rate is 23/77 = .2987 -- under the income tax model, the tax is 23/100 = .23 .
The example is easier to understand on a $130 total bill, after taxes. The pre-tax item price is $100, the tax is $30. Under the state sales tax model, the tax rate is 30/100 = .30 .
-- Under the "income tax model", you can say the tax is 23/100 = .23 , but it makes no sense to do so, seeing that the actual tax is 30% .
It is mind boggling that Fair Tax supporters are trying to promote the Act by using a BS "model" to misquote the actual taxes paid .
The Fair Tax idea sells itself without playing games over percentages .
As I see it, the actual tax percentage paid would have to be printed on all sales receipts in any case.
That percentage would be 30%, -- correct?
I have no problem using either form of the rate, nor have I ever tried to mislead or hide what the rates mean. The sole reason the bill is written in tax-inclusive terms is for comparable debate within Congress. I would actually be in favor of a modification ot the bill so that the tax-exclusive rate is used on receipts and publicly printed rates, because that would make for easier implementation. (Since the NRST does not tax state sales taxes, and one woul assume vice-versa [up to the states to define], tax-exclusive forms are much easier to work with because the individual rates can simply be added together to determine the total combined rate -- that can't be done with a tax-inclusive form.)
But I'm willing to wait on that change until after various tax plans are compared in Congress, so that the form the rate is expressed in does not artifically make the NRST look worse compared to other plans being presented.