One thing I have noticed when people discuss the Fair Tax is that they forget about their paycheck. People are so conditioned by the government to think only about their take home pay (ie the money that the government lets you keep after confiscating their cut)that they forget about the sizable raise that they would get by ELIMINATING INCOME AND PAYROLL TAXES!! It seems the argument here is whether prices would go down due to the pressure of competition. It seems to make sense that they would. Take away the burden of corporate tax and compliance costs and this makes sense. One guy is going to lower his prices to go after a bigger share of the market and all of his competitors will be forced to follow suit or go out of business. The 20-30% anticipated drop in prices will be countered by the 23% NRST paid on new goods. Therefore prices will likely stay the same. Nothing wrong with this being a wash in my book and here's why. The part that everyone seems to forget is that on the day income tax and FICA stop taking their cut, you get a 20-40% raise. That is the beauty of this thing. You get a big raise and prices stay the same. Not to mention the fact that WE make the decision on how much tax we pay, not the government. I can remember thinking "man, I sure wish I could keep all of the money I make every two weeks" when looking at my paycheck. That is what the Fair Tax will do. Granted, the state will still get their cut (if you live in a state with state income tax) but the rest of that money is yours to do with what you want. It's your decision, not Washington's.
Take away the burden of corporate tax and compliance costs and this makes sense.Just how much do you think the corporate tax and compliance costs are?
Sorry, but that is a huge problem. If I still have to pay you the same, I can not lower the price of my goods. That is the problem with much of the anaylsis. You can't have both. If I have to cut 30% off the price of my goods, I need to save 30% and that include cutting my employees wages in the amount of tax that is paid. If they pocket the savings, the price of the goods stay the same PLUS have a 30% tax. My compliance cost for taxes is less than 1% of my gross sales. It is not gonna save me much.