I should have differentiated between tax "exclusive" sales taxes like state and local taxes are and the tax "inclusive" sales tax a NST would be. State and local sales taxes are computed on the sales price. A NST would be included in the sales price. State and local sales taxes are calculated as a percentage of the sales price. A $100 item would (in Illinois) be taxed at a 6% state tax and 1%(roughly, it depends on locality) local tax. You would pay $7.00 state and local sales tax. Your purchase price includes the $23.00(30%).
Your equation:
"State sales tax + local sales tax + city sales tax + price TIMES the 0.30 fairtax rate"
should read
Total price = ((Price * 1.30) * 1.07 (State and local sales tax)
A $77.00 item would be ((77.00*1.30) *1.07) $107.00.
Total price = ((Price * 1.30) * 1.07 (State and local sales tax)So, the NST is included in the price before state/local taxes??? What a ripper. Also, are State income taxes abolished by the NST?
This whole thing is a sham and rates will rise enormously from the initial 30% rate. The only way to stop this is to stop government spending. Anything else is just rearranging deck chairs on the Titanic.