The particular form (16%) here is to replace income taxes only, leaving the SS/Medicare payroll taxes as is, and has a little higher rebate making the proposed rate for income tax alone 16% instead of 15%.
According to the article, replacing SS/Medicare taxes and implementing personal savings accounts as well, an additional 3% would be necessary bringing the total 19%.
The other factor is that the study is current and reflects the Bush administration tax cuts, which current proposals do not.
19% sure looks alot better than 23% for a revenue neutral rate of a fairtax like implementation.
Thanks!
How can a 3% increase in sales tax replace the SS/Medicare tax of 15.3% on most wages. That doesn't make any sense.
Great post, a_g. Of course, I would like to have seen their direct analysis of the Fair Tax, but your comments are very helpful on that point.