I meant to say "after the FairTax" (you couldn't figure that out?). After the FairTax, I start a "business" to buy my computer and it's is no longer in the PCE. Your denominator is reduced.
I see, in your world self-employed types and small businesses persons don't already declare personal use PCs as business deductions under the income/payroll tax, in their effort to limit or evade income taxes and thus reduce PCE because those computers and other equipment and commodities and services are improperly declared as business expenses.
Sorry the scenario already is in place and in use, reducing PCE due to many such evasions across the board.
AFT assumes (for rate calculation purposes) the same folks doing it now will continue to attempt to do so under a retail sales tax system. In fact the same self-employed business folks not declaring cash income now, are also purchasing personal use computers declaring them as a business expense to increase capacity for evasion into their above board transactions.
In fact this form of tax evasion is pervasive and stretches to the individual employee who receives a PC from his employer for business use which he then engages in his private personal affairs, to the small business owner willing to stretch his tax return deductions to the limits of IRS in capacity to audit them on top of the under-the-table cash transactions he engages in to evade the income tax outright.
You may come up with all the theoreticals you wish, the reality is the evasion and essential MO is already in operation discounting PCE and by the same folks who would be inclined to try continue there evasions using the equivalent MOs they are used to and currently using under the income tax system.
Your theoreticals do not in any way detract from the concept that PCE and revenue yields are already derated for the evasion that exists today continuing at the same levels will not change the calculated "revenue neutral" rate in any appreciable degree.
I see, in your world self-employed types and small businesses persons don't already declare personal use PCs as business deductions under the income/payroll tax, in their effort to limit or evade income taxes and thus reduce PCE because those computers and other equipment and commodities and services are improperly declared as business expenses.The information in the PCE is based on surveys of either manufacturer's shipments or retail sales. If I bought the computer at BestBuy, how exactly do you think that isn't in the PCE?