In my calculations I also lowered the total amount of State and Local spending due to savings from the repeal of FICA taxes and reduced non-compensation pre-tax costs. This both lowers the FairTax base and the total spend, but given your note that most education spending is actually taxable I reduced the total spent too much.
Revising the Calculations:
After adjustments, $ 1,112 Billion would be taxable under the FairTax. Of that, $655 Billion would be taxable Compensation.
Total FairTax due on that spending at 19.3% (inclusive) is $265 Billion of which $79 Billion could be paid by cost reductions (repealed FICA tax, pre-tax cost reductions) for a net Deficit of $186 Billion. Of the total FairTax due, $156 Billion is due to Taxable Compensation alone (as compared to the $37 Billion paid today as ER payroll tax.)
If States and localities reduce spending to balance the budget, the Federal government doesn't collect enough FairTax to be revenue neutral. Otherwise State and Localities will have to raise their taxes by over 12% to make up the difference.
Total FairTax due on that spending at 23% (inclusive) is $332 Billion of which $79 Billion could be paid by cost reductions (repealed FICA tax, pre-tax cost reductions) for a net Deficit of $253 Billion. Of the total FairTax due, $195 Billion is due to Taxable Compensation alone (as compared to the $37 Billion paid today as ER payroll tax.) State and Localities will have to raise their taxes by over 17% to make up the difference.
Either way, a rather significant State/Local tax increase is in the cards with the FairTax.
By the way, the SAME problem exists for the Federal Government: its cash flow turns negative under the FairTax "revenue neurtal" rate leaving an operating deficit. While the Balance Sheet may show revenue neutrality, the cash flows don't balance.
By the way, the SAME problem exists for the Federal Government: its cash flow turns negative under the FairTax "revenue neurtal" rate leaving an operating deficit. While the Balance Sheet may show revenue neutrality, the cash flows don't balance.What!?! You mean you can't move money from one pocket to another and call it net income? Shocking!
That's no more convincing or accurate than your earlier ramble, Dimp-Dimp.
I'd far rather believe a view by real economists and taxation PhDs than some back of the envelope DU blowhard intent on disrupting these threads.
Sorry, no cigar.