Lower interest on public debt (Fed savings $120B/yr, State & Local $80B/yr)Interest on public debt is already contractually locked in. If interest rates do decline, NEW debt might decline, but CURRENT debt will remain as pre-FairTax Interest Rates.
State & Local taxes lowered by adoption of FairTax and tapping underground economyThe FairTax does NOT tax the underground economy; it merely shifts the tax bite from the point there money ENTERS the underground to where money EXITS the underground. States and localities must now pay 30% FairTax on consumption purchases and salaries; nowhere in all the FairTax propaganda nor in the ramblings of its proponents is this fact EVER acknowledged. States and localities will need to RAISE tax rates to compensate.
Increase in purchasing power for educational expensesI'll grant you this one; but it doesn't take the FairTax to make that so.
Avoidance and evasion limited to 15% of total retail sales purchased outside of large retailersThis fails acknowledge inevitable shifts in purchasing behavior. Avoidance over the ENTIRE base will increase as used goods become favored over certain new goods. This fails to acknowledge inevitable changes in black market purchase levels. The current FairTax base/rate calculations fail to take even you limited avoidance and evasion into account.
Huge increase in personal consumption as individuals see larger paychecks and lower interest ratesWell, this one is just flat out false. ALL the economic models of consumption taxation predict significant DROPS in consumption in the early years of implementation (and ALL of them hold prices AND purchasing power constant - neither prices nor take home wages rise.
Expansion of economy by 10% brings in additional $230B/yrWell, the question is whether the FairTax will allow such expansion. The models used to predict such a windfall hold prices constant, take home pay constant, and purchasing power constant (for ALL). That will not happen under the FairTax: Prices will rise non-uniformly, take-home pay will rise non-uniformly; the net outcome is shifts in consumption not contemplated by the models. Before any expansion can take place, the Tax rate must rise to maintain revenue neutrality, further raising prices. And, given that the actions of the Fed are not modeled in simulations of consumption taxes, it's quite likely that the Fed response will be to throttle any growth that does happen to current levels. Since we will have experienced a significant DECLINE in GDP prior to any growth, it's not at all clear when (if ever) we would catch up.
[Lower interest on public debt (Fed savings $120B/yr, State & Local $80B/yr)
Interest on public debt is already contractually locked in. If interest rates do decline, NEW debt might decline, but CURRENT debt will remain as pre-FairTax Interest Rates. ]
Really ? There is no 'call' feature in existing public debt ? Maybe you should check again.
[State & Local taxes lowered by adoption of FairTax and tapping underground economy
The FairTax does NOT tax the underground economy; it merely shifts the tax bite from the point there money ENTERS the underground to where money EXITS the underground. States and localities must now pay 30% FairTax on consumption purchases and salaries; nowhere in all the FairTax propaganda nor in the ramblings of its proponents is this fact EVER acknowledged. States and localities will need to RAISE tax rates to compensate. ]
Nobody currently taxes the underground economy. An income tax would have applied to both the legal-income purchaser and again to the income of the illegal recipient. A homeowner pays income taxes but then hires an illegal contractor that doesn't report the money he receives as income, and doesn't pay tax. The PIT and Payroll taxes are based on an assumption that those dollars will be taxed twice, but it is only taxed once -- on the legal income side. Under the FairTax, the overall taxes collected will be higher as the illegal contractor spends the money at retail.
On the state & local employee issue, I've seen it confirmed many times and I've agreed here on FR myself. Of course, you do need to remove all the salaries of people directly involved in education, which is a big chunk of state & local salaries, and you do need to credit the 7.65% ER side of payroll taxes for ALL employees including the teachers. So it is incorrect to say that state & local salary expenditures will increase by 30%. Closer to 12% would be my guess.
[Avoidance and evasion limited to 15% of total retail sales purchased outside of large retailers
This fails acknowledge inevitable shifts in purchasing behavior. Avoidance over the ENTIRE base will increase as used goods become favored over certain new goods. This fails to acknowledge inevitable changes in black market purchase levels. The current FairTax base/rate calculations fail to take even you limited avoidance and evasion into account.]
Well, the 'used goods' argument is false. Take a used vehicle. The price differential between a used vehicle and a new vehicle is based on the total cost 'out the door' for both. If a new vehicle goes up in total cost by 15%, because people have more disposable income to afford 15% more, then the used vehicle will also go up. The relative value of the two vehicles will remain constant, therefor the 'out the door cost' relationship between the two will also remain constant.
The 'black market' argument is also false. It will remain very small because catching it will be so much easier.
[Huge increase in personal consumption as individuals see larger paychecks and lower interest rates
Well, this one is just flat out false. ALL the economic models of consumption taxation predict significant DROPS in consumption in the early years of implementation (and ALL of them hold prices AND purchasing power constant - neither prices nor take home wages rise. ]
"ALL" of them ? Really ? Can you point to one that was not funded by Retailers, and that also included a reduction in interest rates and an FCA ? I don't know of such a study, but I do know human nature. Americans spend every dime they've got and then borrow more.
[Expansion of economy by 10% brings in additional $230B/yr
Well, the question is whether the FairTax will allow such expansion. The models used to predict such a windfall hold prices constant, take home pay constant, and purchasing power constant (for ALL). ...]
It isn't necessary to have everything constant for every person. In the aggregate, I think the model's conclusion is correct. If anything, it under-estimates the euphoria and spending spree the switch to the FairTax would cause. I personally worry more about inflation when the consumer demand skyrockets. Of course that will further enlarge the FairTax base, but then the inflation will damper the initial high emotions amongst consumers.
Well, now, let's see Dimp-Dimp you say that
"... ALL of them hold prices AND purchasing power constant ..." when you're claiming that there is universal prediction of drops in consumption and then
"... hold prices constant, ... and purchasing power constant ..." when you argue that this is the reason for a "windfall".
It really must be comforting to you to have such a flexible set of economic standards that you can use the same set of circumstances on each side of the argument to try to "prove" that different things are caused by them.
Some people take that to mean you don't know what you're talking about - or that you believe you can befuddle all us little wage-earning simpletons that are beneath your ken.