Oh, but it has everything to do with marginal income tax rates. At present these are so high that many people are tempted to evade (but most, being basically honest, do not ... don't know about you, though).
The FairTax rate has absolutely nothing to do with marginal income tax rates or income tax evasion/avoidance. It is simply a factor of the expenditures base and the revenue required. It's the evasion/avoidance in the expenditures base that will increase dramatically with the increase of the overall sales tax rate.
Present sales taxes in states are all over the map in what they do/don't tax and most are replete with many exclusions/exemptions and things not taxed. Almost none of them tax services as does the FairTax.
And one of the reasons the states don't tax services is that they are very easy to evade. Not taxing these services tends to reduce the amount of evasion/avoidance in the NIPA expenditure numbers as compared to the FairTax base.
In fact, many (if not most) states will probably elect to conform their sales taxes with the FairTax once it becomes law. They would be both reasonable and wise to do so. Doing so will about triple the tax base when one considers that services are typically half or more of the revenue and having no exemptions/deductions will easily boost it to a factor of three times the present base. This would mean that a state with a 7% rate presently would have it drop to 2% or 3% or possibly even less while raising the same tax revenue.
That might be true except for the fact that the states will be paying the FairTax on their purchases and their employee's wages thus increasing their expenditures. They would have generate more revenue than they do currently to pay for this increase in expenditures.
This drops your "37%" t-e (which was bogus to begin with)
by easily 3 or 4 percentage points. Even so, at, say 33% that rate is still much lower than the present marginalincome tax rate so what I said still applies even more:
The 37% is bogus. And, again, the marginal income tax rate is not a factor in calculating the FairTax rate.
The lower rate of the FairTax (and of course, you unfairly include state sales taxes with a different base to artificially and dishonestly boost the rate).
And you unfairly don't include the increase in state expenditures due to the FairTax to artificially and dishonestly decrease the rate.
If you include your "7%"and add it on to the existing marginal income tax rate, the IT rate is much, much higher thereby offering much more of an incentive to evade than there will be under the FairTax.
Why would you do that? Talk about dishonest (actually, it's just stupid).
You might go back and check that with your dad (if not Gale and your Brookings Buds) since it seems he needs to give you another dose of common sense. You have lost a good bit of yours. Been around the libs too long, I'd say.
You might try making at least one post that makes sense before you accuse people of losing their's.
You are the one, nightie, who was trying to somehow equate the FairTax rate as "having somehing to do" with the marginal income tax rates. You were attempting this in the post I'm replying to right now. That was not the point as you know full well.
Nor will your "stunt" work of pretending the income tax rate does not matter and that there is no evasion while at the same time pretending that the FairTax rate is so high as to trigger massive evasion. That's simply not true. The relevant points are the gains due to evasion by anyone under the present system as compared to gains under the FairTax.
The IT system has higher marginal rates than the FairTax even including the probable state sales tax rate. In addition, just the withholding taxes at 15.3% t-i (or 18.06% t-e to use your t-e comparisons). Adding on the 7% t-e state sales tax you tried to add to only one side (the FairtTax side - imagine that) of the calculation, you'd end up with 42.71% t-e at a 15% (17.65% t-e) marginal IT rate. That's a lot more than under the FairTax with the probable state sales tax rate and in fact, the 15% marginal IT rate is probably at least 20% (25% t-e) so that the truly comparative rates would easily be over 45% (50.06% t-e in fact) IT vs 33% FairTax.
"The FairTax rate has absolutely nothing to do with marginal income tax rates or income tax evasion/avoidance." Certainly the FairTax rate has absolutely nothing to do with marginal income tax RATES (in that it does in no way determine them), but the last phrase in that sentence when used correctly from a grammatical standpoint is a flat lie. The FairTax rate and the income tax rate and the comparison of them have everything to do with evasion.
The obvious point being that 45% (which we showed is over 50% remember) is MUCH greater than 33% and anyone with half a brain (eliminates you I guess) would realize there was a bigger incentive with evading the 17+% higher IT rate ... in other words, the present IT system is more likely to incentivize evasion than the FairTax.
Services are certainly no more difficult to tax than products and evasion is neither easier or harder - but let's keep in mind the evasion under the IT of services which is exactly comparable to the FairTax (except that with the IT, the evasion gains the evader more bux than with the lower-rate FairTax; 50+% vs 33%, remember). Or perhaps you'd like to lie and say there is no evasion with services under the IT?
Claiming that, somehow, under the FairTax evasion is vastly increased for either products or services is ludicrous and makes you look like the dolt you are. There will be evasion under any tax system and the amount is greatly governed by how much the evader stands to gain under the particular tax system and the safety he perceives in evading and has nothing at all to do with your lovely (and inapplicable) "expenditures" digression.
With less to gain under the FairTax and with the ability to concentrate more collection resources on a smaller number of taxpayers, an evader would have to be an utter fool to think the FairTax is "better" for him --- it ain't; just the opposite. Go ask your dad.