[narby]

The FairTax is a progressive tax. The biggest-spending wealthy will pay an effective tax of $23 for every $77 they spend on new products and services.

My quick scan doesn't pick out how they plan to do this. But I believe that this proposal only taxes big ticket items above $500, so as to "tax the wealthy".

Anyone who works in manufacturing in the US had best squeel loud about this. It will complete the destruction of manufacturing in the US, as most such items are above $500.

I can see an economy dominated by $499 items, convienently combined to make something that would cost more. Motorcycles sold with frame and engine separate. Airconditioner "kits" sold in pieces. Etc.

This is a mess and will be worse than what we've got.

[ThinkDifferent]

But I believe that this proposal only taxes big ticket items above $500, so as to "tax the wealthy".

Not true at all. See fairtax.org for details.

[Dead Dog]

Manufacturers wouldn't pay ANY tax. Only the finish product is taxed. OEM's are tax free. Where we used to collect tax at every "Value added" stage, we would now only collect at the Point of Sale. This means the tax burden is spread to imports as well. It is a defacto tarif, and would actually bring work home.

[Stonedog]

But I believe that this proposal only taxes big ticket items above $500

That is not part of the fair tax proposal. To learn more about the Fair Tax go here.

[Uncle Vlad]

The truly great thing about the fair tax is the fact that 20% of the cost of new retail sales and services is tax. Within a short time, the marketplace, through competition, supply and demand, etc., would lower prices on items to accommodate the removal of the previously built-in tax. It also makes American goods more competitive overseas, since that 20% built-in tax goes away. So the government gets fully funded, the poor are taken care of, and everyone wins.

Except, of course, the liberals, because they no longer control the tax code.

It took a while for the idea of the Fair Tax to sink in for me, because I had long advocated the idea of the Flat Tax. The Fair Tax, on the the other hand, seems like an even better idea to me. I'd like to see an intelligent debate of both ideas, but I don't think we'll get it as long as the liberals can demagogue it.

[Willie Green]

This is a mess and will be worse than what we've got.

Statement of John G. Wilkins, Managing Director,
Barcroft Consulting Group, on behalf of National Retail Federation
Testimony Before the House Committee on Ways and Means
Hearing on Fundamental Tax Reform

Mr. Chairman and Members of the Committee:

I am managing director of the Barcroft Consulting Group and I am here on behalf of the National Retail Federation. My statement reports on the findings of a study undertaken by PricewaterhouseCoopers ("PWC") for the National Retail Federation Foundation. I was principal author of that study, which examines the economic impact of substituting a national retail sales tax ("NRST") for the federal income tax.

~~~SNIP~~~

Conclusion

If a NRST is enacted, the U.S. economy would lag behind for at least three years and employment would dip by more than one million jobs. Beneficial effects would not be felt for at least five years after adoption. While it is admirable to seek a fairer and simpler tax structure to replace the incredibly complex income tax code, trading an income tax in for a national sales tax is an experiment that could bring serious harm to a flourishing national economy. Uncertain long-run benefits are far insufficient to risk the short-run setbacks in virtually all sectors of the economy.

[Zon]

The sky is falling and there you are without your umbrella.

[brooklin]

Exactly.The yachting industry was handicapped by George Mitchell's luxury tax in the '80's. It turned out that the truely rich could set up a company overseas and buy their boat from an overseas company. They don't seem to like paying anymore to the gov. than they have to.

[Principled]

http://www.fairtaxvolunteer.org/smart/index.html

FAQ on the plan.