[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.
It truly flat out amazes me that these guys (the SQL squadron) keep bringing up the SOS (Same Old "Stuff") repeatedly despite the fact that there have been many refuations of the "Stuff" in the past - e.g., the non-taxed illegal aliens (or only equally taxed) under the FairTax nonsense. Almost anyone can grasp that the illegal economy contributes almost nothing to the tax coffers presently but will do so greatly under the FairTax.
And there are many other similar bits of nonsense. I can only presume they think enough mud thrown on the wall will stick with some newcomers.
Didn't say there wasn't. What I am suggesting is that it will likely NOT be used. Imagine the upheaval as $5 Trillion of Federal public debt is refinanced at a lower interest rate. First, the "call risk" on bonds skyrockets making bonds fall in price, and become less attractive investments. Second, incomes previously derived from the existing interest rates face decline in the face of rising consumer prices (related purchasing power decreases.) Third, it only saves 120B per year. That's well within the threshold of tolerance for long term deficit spending.
In short the political pressures to leave the debt in place would be SUBSTANTIAL.
Again you're confusing what COULD happen with with will likely happen.
Both systems (supposedly) raise the same amount of tax revenue. Revenues will NOT, as you say: ... be higher as the illegal contractor spends the money at retail. Only the payee will change ... but, using your logic, the illegal contractor will raise his prices to mainting constant purchasing power; ultimately the person who hires the illegal will foot the tax bill through higher prices.
I didn't say ALL expenditures would increase by 30%. So we then agree in principal: states and localities will have to raise MORE tax money than they currently have to pay their FairTax prices. Nowhere in the FairTax propaganda is that noted.
Well, the 'used goods' argument is false.
So then you are suggesting that there will be no net shift in buying behavior, no new "choices" for people to make.
In other words, the notion that the FairTax allows you to pay as much or as little tax as you wish is really a red herring.
In any event, the FairTax base does NOT allow for ANY avoidance or ANY evasion from current retail purchase behavior. That is simply unrealistic.
Certainly all of the ones cited here on FR do.
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.
I guess you haven't been paying attention. The Jorgenson study, funded by the AFFT, does (and even includes the prebate!) The Kotlikoff studies do as well ... Have you read them??