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Originally Posted by roosterk0031
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I'm aware of it, thought it sounded like a good idea, bought the book and then realized the math doesn't work. It is a national sales tax combined with a universal basic income.
The biggest slight of hand is saying the sales tax would be 23%. That is the tax-inclusive rate which is not how sales tax is done in the USA. We collect sales tax using tax-exclusive prices (Cost of item + X% tax) The tax-exclusive rate in the FairTax is 30%. That sounds a lot worse and kills any chance of it passing. It is purposefully misleading.
Fairtax then use a lot of suspect math to say 30% is enough to raise the same amount as all the other Federal taxes today. Other people fact checking it put the rate at up to 39% assuming no tax evasion and up to 50% with it.
It is also deeply regressive. The "prebate", which is the supporters name for a universal yearly income of $2707 per adult and $957 per child is meant to make it sound less regressive. It doesn't because that money is given to everyone regardless of income. Of course the big kicker is that the things that low income people spend most of their money on like food, healthcare, rent and transportation are all taxed while things that the wealthy spend their money on like stocks, bonds and real estate are not taxed.
Calculations vary a bit but the basic result is that under the FairTax people that make less than $25K a year come out the same, people that make $25K to $200K a year pay more in taxes, and people over $200K pay less than what they do today. Of course that is the intent of the proposal.