[SolidSupplySide]

The FairTax’s effective marginal tax on labor supply is 23 percent.

Oh. The Fair Taxers won't like this! Someone is admitting that the FairTax is effectively a 23% income tax! This is because a sales tax and and income tax can be structured to be "economically equivalent".

[SolidSupplySide]

Someone is admitting that the FairTax is effectively a 23% income tax!

23% of GDP is a whole lot of money!

[ancient_geezer]

This is because a sales tax and and income tax can be structured to be "economically equivalent".

Ahmmm, "economically equivalent" just means they bring in the same amount of revenue to the govenment.

Any tax system can be made economically equivalent to any other tax. It just needs to be designed to be revenue neutral.

[KarlInOhio]

Is that supposed to have been a surprise? If I make $1 and spend $1 more under the FairTax, I pay 23% of that to the feds. If I decide to save it, the feds get nothing now.

On the other hand if I make $1 more now I pay $0.3265 more to the feds, plus my employer pays another $0.0765 for a total tax rate of 40.3% whether I spend or invest it.