[Your Nightmare]

Its impact on major purchases: real estate, education, automobiles etc would lead to economic collapse unless you totally accept the rosy and utterly unrealistic scenarios painted by its advocates.

Under the FairTax, education expenses would be exempt. The rest of your issues are right on, though. What bank would loan a person an extra $60,000 for tax on a $200,000 home? What is the collateral for the $60k?

[justshutupandtakeit]

So book purchases, rent, food for college students is exempt? That sounds nice but one more layer of corruption and complication is added to this "simple" scheme. Before long it will be just as complicated as the current scheme and require as many experts and advisers and enforcement officials.

[Principled]

What bank would loan a person an extra $60,000 for tax on a $200,000 home?

Happens today.

[ancient_geezer]

What bank would loan a person an extra $60,000 for tax on a $200,000 home? What is the collateral for the $60k?

Only reason for collateral is to cover risk against default on the loan. That portion that represents unpaid but due taxes in default are well covered.

 

H.R.25

Fair Tax Act of 2005 (Introduced in House)
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:

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`SEC. 205. BAD DEBT CREDIT.

`(a) Financial Intermediation Services- Any person who has experienced a bad debt (other than unpaid invoices within the meaning of subsection (b)) shall be entitled to a credit equal to the product of--

`(1) the rate imposed by section 101, and

`(2) the quotient that is--

`(A) the amount of the bad debt (as defined in section 802), divided by

`(B) the quantity that is 1 minus the rate imposed by section 101.

 

`SEC. 802. BAD DEBTS.

`(a) In General- For purposes of section 205(a), a bad debt shall be a business debt that becomes wholly or partially worthless to the payee.

`(b) Business Loan- For purposes of subsection (a), a business loan or debt is a bona fide loan or debt made for a business purpose that both parties intended be repaid.

`(c) Determination of Worthlessness-

• `(1) IN GENERAL- No loan or debt shall be considered wholly or partially worthless unless it has been in arrears for 180 days or more, except that if a debt is discharged wholly or partially in bankruptcy before 180 days has elapsed, then it shall be deemed wholly or partially worthless on the date of discharge.

• `(2) DETERMINATION BY HOLDER- A loan or debt that has been in arrears for 180 days or more may be deemed wholly or partially worthless by the holder unless a payment schedule has been entered into between the debtor and the lender.

`(d) Cross Reference- See section 205(c) for tax on subsequent payments.

[phil_will1]

"What bank would loan a person an extra $60,000 for tax on a $200,000 home? What is the collateral for the $60k?"

Duhhhhh Could it be the value of the home?