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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120812  
Subject: Re: FairTax Date: 6/23/2003 4:33 PM
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zrpurser: "A friend of mine showed me this link for something called the FairTax:

www.fairtax.org

From all of the information on the website it sounds great, but all propaganda sounds great on the surface. So can anyone give me any real insight on the pros and cons of this idea."


Several things (and it has been awhile since I have looked at the FairTax site, so I may not remember entirely accurately or remember everything I would write upon more reflection).

First, FairTax plays games with the percentage by calculating it as inclusive, contrary to the way most people think about sales taxes. For example, if the item in question costs $77 and the $23 dollar tax brings the total bill to $100, most people would consider that 29.87% sales tax (23/77) but fair tax calls that 23% rate. To me, anyone or any organization that buries its lead that deeply immediately raises my suspicion. IMHO, it ought to be described as a 30% sales tax, just like state sales taxes are described.

Second, FairTax assumes that prices of all items will be reduced because of the change in tax structure, so that final cost of item, even with 29.9% federal sales tax will be about what it costs now. I have not seen sufficient data that supports that view, and to me it appears to fall more into the category of wishful thinking.

Third, FairtTax appears to assume that this change will not lead to any change in purchasing behavior. Who else remembers the luxury vehicle and boat tax, and its unintended effects?

With more time and thought, I could probably raise a few more concerns.

Regards, JAFO
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