And you never answered the question: Isn't he entitled to mainting his purchasing power as well?On a microeconomic level, if the FairTax is truly revenue neutral, across the board real prices (purchasing power) can not change. If overall take home goes up, overall prices go up the same amount.
Right, in aggregate; but locally, the distribution of changes is non-uniform. Some will experience increases in purchasing power, some will experience decreases, some will experience no change.
Kellis seems to be arguing that because the aggregate shows a net zero change, that each of its components should individually show net zero change.
On a microeconomic level, the FairTax is not "individually" revenue neutral ... it can't be because some pay higher income tax rates than others yet buy the same jug of milk at the grocery store at the same price. Prices may rise or fall equally for all; but take-home pay will not. Individual purchasing power effects will be widely varied.
Yes, this is true. This is the conclusion that Principled and I generally agree on. Relative purchasing power cannot change by very much.
There is a small overall gain expected by removing the unproductive activities required by an income tax, and freeing all that well-educated tax-compliance staff for more productive uses.
Overall, however, there will not be any huge gains like zero overall price change and simultaneous huge increase in take-home pay. The increased take-home pay will be needed to pay the taxes on the purchase.
The monetary gains will be small for most people in the short term. The more productive environment and effect of savings and increased capital available will grow the economy, however. That will pay off in the longer term.