[Your Nightmare]

So what is the $219 billion for "Religious and welfare activities" in the PCE? Either the FairTax taxes these nonprofit expenditures in the PCE or you've got yet another big hole in your FairTax base.

I think you need to study this a little closer. I'm pretty sure you are wrong. A church is considered a "nonprofit institution serving households" and it's "output...is considered to be purchased by persons." Since the price (if any) an NPISH might charge for their output isn't a good gauge of it's worth, the PCE includes all operating expenses incurred by the NPISH (that would include the purchase of Bibles).

So, again, either the FairTax taxes these "operating expenses" of nonprofits or there is a huge hole in the FairTax base. If you need a hint, I'm pretty sure the authors of the FairTax were aware that the operating expenses of nonprofits was in the PCE when they left it in the FairTax base for rate calculation.

[ancient_geezer]

So what is the $219 billion for "Religious and welfare activities" in the PCE? Either the FairTax taxes these nonprofit expenditures in the PCE or you've got yet another big hole in your FairTax base.

Operating expenses of charitable organizations that represent consumption.

If you need a hint, I'm pretty sure the authors of the FairTax were aware that the operating expenses of nonprofits was in the PCE when they left it in the FairTax base for rate calculation.

I bow to your analysis after checking to make sure that such consumption was not removed from the FairTax base calculations for tax rate:

 

http://www.fairtaxvolunteer.org/smart/tax_system.html

 

Table two: national FairTax rate calculation: 2003
Line	Description	FairTax base	Source
	Taxable item	Billions
1	Personal consumption expenditures	$ 7,760.9	NIPA Table 1.1.5, line 2
2	Purchases of new single-family homes	$ 310.6	NIPA Table 5.3.5, line 20
3	Purchases of new mobile homes	$ 7.1	NIPA Table 5.4.5B, line 40
4	Improvements to single-family homes	$ 132.0	NIPA Table 5.4.5B, line 42
5	Less: imputed rent on owner-occupied housing	$ 859.6	NIPA Table 7.4.5, line 3
6	Less: imputed rent on farm housing	$ 11.9	NIPA Table 7.4.5, line 5
7	Additional financial intermediation services	$ 83.1	Financial & risk Intermediation greater than NIPA definition
8	Foreign travel by U.S. residents	$ 39.6	One half of NIPA Table 2.5.5, line 110
9	Less: expenditures abroad by U.S. residents	$ 6.6	NIPA Table 2.5.5, line 111
10	Less: food produced and consumed on farms	$ 0.5	NIPA Table 2.5.5, line 6
11	State and local government consumption	$ 1,058.5	NIPA Table 3.10.5, line 47
12	Gross purchases of new structures	$ 213.4	NIPA Table 3.9.5, line 24
13	Gross purchases of equipment	$ 51.5	NIPA Table 3.9.5, line 25
14	Federal government consumption	$ 658.6	NIPA Table 3.10.5, line 12
15	Gross purchases of new structures	$ 15.5	NIPA Table 3.9.5, line 9
16	Gross purchases of equipment and software	$ 78.1	NIPA Table 3.9.5, line 10
17	Less: state and local government sales taxes	$ 343.9	NIPA Table 3.3, line 7
18	Less: government education expenditures	$ 414.7	Table 255, SAOUS 2003
19	Less: private education expenditures	$ 151.7	NIPA Table 2.5.5, lines 105 & 106
20	Expenditures in U.S. by non-residents	$ 86.7	NIPA Table 2.5.5, lines 112
21	Travel to U.S. by non-residents	$ 33.3	One half, SAOUS 2003 Table 1280
22	National retail sales tax base	$ 8,740.0
Revenues to be replaced
23	Income tax	$ 927.7	Dept. of Treasury; derived from Table B-81 ERP 2004
24	Estate and gift tax	$ 22.4	Dept. of Treasury; derived from Table B-81 ERP 2004
25	Payroll taxes	$ 717.8	Dept. of Treasury; derived from Table B-81 ERP 2004
26	Excise taxes	$ -
27	Total	$ 1,667.9
Revenue-neutral rate calculation
28	Tax exclusive rate (no rebate)	19.1%
29	Tax inclusive rate (no rebate)	15.9%
30	Base reduction equivalent for rebate	$ 1,746.1	Total consumption allowance for 109 million rebate units
31	Net tax base	$ 6,993.8
32	Tax exclusive rate (with rebate)	23.8%
33	Tax inclusive rate (with rebate)	19.3%

 

 

 

Apparently the bill's language means, spending for consumption by a non-profit-institution must be taxed. And you are correct that all the internal consumption of even a not-for-profit organization must be taxed under the FairTax implementation of a retail sales tax. Once tax all taxable property and services once but only once as you have pointed out and as explictly stated in the principles of interpretation of the legislation.