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What about sales tax on cars? I need a new truck and the one I’ve been looking at runs $30,000. Right now State sales tax is going to add on another $1,300. If your “fair tax” is passed then I would have to pay another $6,900. So now my 30k truck purchase immediately becomes $38,200?

What about used cars? Do they get taxed? How about ebay, garage sales and flea markets do they get the 23% tax job too? Are is the sales tax going to be collected and enforced? What about sales on services like going out to eat or getting a massage? What about Medication? Or Groceries?

Just seems to me that taxing consumption is about as regressive as it gets.

Only new items are taxed. Used items previously taxed are not taxed a second time when resold. That includes used cars, used houses, or used items at flea markets.

New cars, new houses, and other new items are taxed. Medication, groceries, visits to the doctor, and services are also taxed.

What you may not realize is that you already pay a tax every time you purchase any of these items. Corporate income taxes, as well as the additional payroll budgeted so that employees wages are still competitive after income and payroll taxes, are reflected in the end price of all goods and services. If corporate and personal income taxes are eliminated, the cost of producing goods and services will decrease. Competition will ensure that the price also decreases.

The "embedded tax" has been calculated as 22% of the cost of an item.

As for the tax being regressive, every taxpayer will receive, each month, a prior rebate, what we call a "prebate", for the expected tax burden of purchasing the basic necessities of life, determined by the poverty level. The size of the prebate is determined by the number of adults and dependents in the household.. nothing more. The prebate completely removes the tax burden on those who spend at or below the poverty level. They will not even have to pay the taxes business currently pass onto consumers in the form of higher prices. What could be less regressive?

Oh, and they have a very comprehensive FAQ at FairTax.org. You'll find a lot of answers to your questions there.

There is also a book out in paperback called "The FairTax Book" by Neal Boortz and Rep. John Linder. They are currently writing a new book of rebuttals to common criticisms of the FairTax, that I believe is due out this year.

I encourage you to look into it. I myself am a former Flat Tax proponent and National Sales Tax skeptic, but I'm convinced that the FairTax is the best tax reform proposal out there.

It seems as though your analysis is faulty in that it includes the cost of the nrst but excludes the cost of the income tax. It's a common error and sometimes people do it on purpose.

If I buy a 30k automobile today, I have to earn 40k. This is because I'm have a 25% effective federal tax rate today. So the "cost" of the car isn't 30k at all, it's 40k.

If I buy a 30k automobile under the nrst, I will have just to earn 35.5k. THe calculation is 30k*.91 = 27300 (reflecting a 9% reduction in pre-nrst prices - stipulated by the most vehement anti-nrst posters) then 27300*(1+23/77) = 35454.

So I have to earn LESS under the nrst in order to buy the car. Indeed I would have $4500 extra left in my pocket under the nrst.

Please note that the above uses my effective income tax rate but my marginal nrst rate - my effective nrst rate would be lower = say 17%). That is, I am neglecting the effect of the rebate (on my purchasing power.)

"Used" cars are not taxed. "Used" means that tax has been paid on it before via the nrst OR by being produced under the income tax system... for example, houses sitting for sale today won't have any nrst added if they're sold after the nrst is implemented. If the item is used, there's no tax.

Groceries, medicines, massages and the like are all already being taxed via the income tax system (as described above) and will be taxed under the nrst.

The rebate mechanism, however, prevents regressivity.

The 23% "sales tax rate" is a clever lie.

After the Fairtax a pretax price of $30,000 would have a tax of $8961.00. Actually more because the Fairtax law says the rate of tax is "23% of the gross payments for taxable property or services".

Since you would have $1300 state sales tax included in the "gross payment" you would pay federal sales tax on that too.

After the Fairtax:
New truck...$30,000
State sales tax $1300
Sub total:...$31,300
Fairtax (29.87%) ON $31,300 = $9349.31 (federal sales tax)

Total price out the door (gross payment):....$40,649.31

23%(fairtax rate) of $40649.31(gross payment) = $9,349.34

Now there's a plan to help new car sales. < /sarcasm >

Oh, BTW, Any talk of 20+% price reductions to offset the new tax is bogus. It can't be done unless everyone also takes wage reductions...the only thing written in law is the tax, everything else is wishful thinking.