Not as much of a problem as you may imagine. In fact, you'd probably be better off to wait until the FairTax is in place. Here's the way it shakes down.
Prices will drop a significant amount due to the removal from current prices of what is often called a "hidden tax" which is the embedded tax cost in everything we buy and it starts and builds as the thing progresses from inception on to final consumption, getting a bit more expensive at each level.
In addition to that, you will be receiving more of your paycheck if you're working, or - if not - you'll not be taxed on savings and invesments either/both of which will help you accumulate funds. Moreover, interest rates will drop so that your car loan will be at about a 2% lower rate.
So there are several things that help you get that car with the FairTax:
1) Lowered prices
2) Higher earnings or investments - free of tax
3) Lower interest rates.
In addition to all that, when the FairTax becomes law most states will do the reasonable thing and conform their state income and sales tax laws to the FairTax meaning that they'll use the same tax definitions as the FairTax. this both eliminates state income tax (if you have it) and will also lower the state sales tax rate dramatically in most states - down to something like 1/4 to 1/3 of the present rate. There's a good discussion of the state tax situation here so you can get a better handle on what might happen in your state:
http://www.fairtaxvolunteer.org/smart/tax_system.html
Actually, I'm holding off such a purchase for fhose very reasons. Right now if the FairTax is passed as a revenue neutral bill (which it should be), the FairTax federal rate would be about 19% which covers what are payroll wihholdings in the current system as well as all income (and other) taxes specified in the bill.
Altogether I believe you'll spend a good bit less than you're now thinking you will. You may even wish to upgrade the options some!
"Not as much of a problem as you may imagine. In fact, you'd probably be better off to wait until the FairTax is in place. Here's the way it shakes down."
I have researched since we last debated this. There are some holes and as Neil admits, it isn't perfect. But I am now an advocate. I disagree with the notion that prices will immediately drop. And I also believe there wil be a hiccup in the economy as consumers "reload." The hiccup will come from (In my opnion based on my own research) three effects.
1) Producers will balk at being the first to "dramatically" reduce prices (before tax prices) as they cannot forecast future costs until current inventory is depleted. Further, there will be incentive to make the money available while hedging bets on consumer suspicions about product costs. They may be concerned about an immediate drop in sales while consumers wait out the price correction for the added tax.
2) If prices take 3 months to "correct" for the tax, consumers are not going to immeidately see disposable income SAVINGS to buy the immediately more expensive products. The price jump might be intimidating at first while only adding %15 to their takehome pay.
3) Finally, (I have not seen this in any publication) price reduction due to "hidden/embedded taxes" are only going to be immediately recognized in labor related taxes. The raw material suppliers to production lines are not going to be able to immediately calculate the complete savings. Remeber, energy is taxed, insurance is taxed, leases and mortgages are taxed, fuel is taxed, etc. All of these factors build up to costs that companies must cover in the price of their goods. The price drop might take a while to get manageable.
While the price correction is being driven by supply and demand to make sales, companies are only going low prices as much as they can continue to forecast profits. That chain starts at the very bottom of several companies. At the same time, consumers get excited about extra income but may start saving it faster than they spend it. Saving money is good but it does not drive the economy. Spending drives the economy.
Thank you. This explains much. I'm going to hold off and see what happens. My old clunker will run for a while. Thanks again.
Let's get this straight:
1. Prices from the elimination of so-called embedded taxes would fall by 23%. (let's skip the tax-inclusive vs. tax-exclusive problem) The fairtax would then raise that price back to where it was. (Fairtaxers claim that prices would stay the same.)
2. Meanwhile, my income tax goes to zero.
3. If prices stay the same, and I pay no income tax, how does the government get revenue?
Sounds like a lot of SOMETHING FOR NOTHING to me!