[ale] OT fairtax isn't

[Byron A Jeff]

On Fri, Mar 16, 2007 at 04:17:27PM -0400, Matt Kubilus wrote:
> On 3/16/07, Jeff Lightner <jlightner at water.com> wrote:
> > Well we'll have to agree to disagree.
> >
> > Confusing because of "prebates".   I don't see the need.  If you only
> > make $1000 a year you pay significantly less than someone making
> > $1,000,000.
> >
> 
> But the tax for the person making $1000 is going to reduce the ability
> of the destitute to buy bread, whereas tax on the person making
> $1,000,000 reduces their ability to buy a 17th BMW.  It's a question
> of what is just in a society.  Do citizens have a basic right to the
> necessities of life in the wealthiest nation in the world, or do
> citizens have the right to sit on 'their' pile of cash and watch the
> nations infrastructure crumble around them.

Excellent point. Also as sad as it is to say, how long do you think it'll
be before the destitute masses will come looking to separate those citizens
from their pile of cash?

> What has anyone figured that this sales tax economy will cost per
> dollar.

I'm guessing somewhere in the 35% range. Now you have to be aware of
difference in the embedded tax rate vs. the external tax rate. In the
Fairtax book Boortz simply wanted to list the price of items with the
tax included. But that rate is different and lower than the actual tax
rate applied. For example take a 35% external tax rate. So if you spend
$1 on a good, then you pay $0.35 in tax. The embedded tax rate would
be $1 including tax. But the amount spent on the good if the good+tax = $1
is $0.74. So $0.74 goes for the good and $0.26 on the tax. Since you spent
$1 and paied $0.26 in tax, they call that tax rate a 26% rate. 

> It looks be 26%. 
>  Tennessee (no state income tax) has a %9.75 tax on all goods,
> food or BMW.  Georgia income tax is about a fourth of the state income
> tax, so round about %50 on all goods.  That's going to be some
> expensive milk and cheese, let me tell you.

But you'll have both your withholdings (all of them) + the prebate dollars
in which to spend on that expensive milk and cheese. And Boortz argues
(not too persuasively IMHO) that the price of the milk and cheese will go
down because the embedded payroll and other taxes will be eliminated.
I think that goes against human nature. However, gas prices go up and down,
so maybe anything is possible

BAJ