The $130 number is not correct either for all the reasons just stated in $#38,
In fact, the tax inclusive revenue neutral rate right now is about 19-20% ratjer than 23. that's make the t.e. rate something like 23-25%.
Without the prebate the t.i. rate would be about 3% lower so I really don't think the description "far lower" would be appropriate. This (the 3%) has shown up in several studies BTW and seems to be fairly well agreed-upon.
Wih the removal of the income tax there will actually be (rather than a deflation) a very significant economic boom which helps almost all of us.
With the exception of autos and houses. A significant part of the economy.
If I start house hunting , find a $200k new home, I'm looking at a $46k+ sales tax.
There is no way I'm going to buy that house.
Either I have to come up with a 30% down payment or I'm going to finance the sales tax.
The same with autos.
The new car and home market will be a thing of the past.IMHO
I would love to see the end of the income tax and IRS but I don't think this is the answer.
Another thought on the Fair Tax.
As I understand, lower income families will get a rebate check monthly from the government. That means middle income and up families will be footing the tax. Basically what we have now.
Also, how is that income computed? Who is going to compute it? The IRS? Is interest income and all the other similar sources considered 'income'?
I can see loopholes in the proposal that will require all kinds of 'amendments', resulting in a bloated tax law similar to present.
At the very least, lower the tax rate and apply it to everyone.