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To: OHelix
Your quote is in regards to hypothetical NRST plans, and their hypothetical issues do not apply to the FiarTax.

How does the FairTax differ, and how does it avoid this problem?

346 posted on 03/04/2005 12:27:06 PM PST by expatpat
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To: expatpat
How does the FairTax differ, and how does it avoid this problem?

I think ancient geezer already answered your question in post 337. But I will attempt to, also.

A Joint Economic Committee ("JEC") study concluded that the NRST rate would have to be at least 32 percent unless imputed items of consumption, like "rent" that the national income accounts assume homeowners pay themselves were also included in the base. Furthermore, if food, medicine, and physician's services were excluded (as is commonplace among many state sales taxes) the rate would have to rise from 32 percent to 49.3 percent. Alternatively, they found that if all services were excluded from the base but food and medicine continued to be taxable, the rate would have to rise to 64.6 percent.

Wow! 49%, 64%, and rising. Principled and ancient_geezer didn't share that with us!

The FairTax differs from the above in that the above is describing hypothetical qualities of hypothetical NRST plans, which are NOT qualities of the FairTax. The FairTax solves the "problem" caused by the examples you cited by doing the oposite of what your examples do: it BROADENS the tax base over ALL consuption rather than NARROWING the tax base by picking and choosing special items to exempt.

Maybe I'm not understanding your point. It seems obvious to me that the more items exempt from taxation, the narower the base, and the higher the tax rate would have to be to be revenue neutral. The FairTax is designed to broaden the tax base over all consumption to make the rate as low as it can be. You seem to be not in favor of the FairTax, but your hypothetical examples of things that would increase the rate are examples of what the FairTax, as written, has avoided.

361 posted on 03/04/2005 12:55:58 PM PST by OHelix
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