Well, actually, Karen Walby's most recent analysis shows the revenue-neutral rate to be 19%. But that is because we are running a deficit. A 19% FairTax would also result in a deficit if enacted today.
Whatever the rate is, it could be lower by tapping the PIT on deferred accounts that people were already expecting to pay.
The lower the rate, the easier passage of the FairTax would be. The fewer points of "unfairness", the easier the passage. Those that have converted to Roth's are going to be irate.
So the question is: Do we generate more good will thru a lower rate than we squander by eliminating the windfall on deferred accounts ? After all, that money was earned under a PIT system.
If the windfall generates more support than the lower rate, then fine. I would vote (if given a chance) either way. My concern is that the higher rate may prevent passage.
My concern is not for myself and my deferred accounts. I figure I am already paying an AVERAGE rate of 40% if I include the embedded taxes, so 23% or 19% makes little difference. My focus is on making the FairTax agreeable to the largest number of people.
You comments are both understood and appreciated. I haven't any doubt that that will rightfully be some of the discussion when the bill is marked up in Congress. It has no doubt already been discussed within the FairTax organization but I'm not privy to their thinking.
The revenue-neutral requirement does not account for a deficit or lack thereof but merely attempts to provide the same level of funding as at present - it is not a spending or deficit reduction measure.