1) A rate of 23% seems awful high to me as a sales tax, and who's to say that rate can't increase in the future?
2) What happens in states that already have a sales tax, like in MA?
You must remember that the fairtax replaces not only the personal income tax but social security and medicare payroll taxes as well.(The Corporate income tax and the inheritance tax go away as well.) You really should, in the privacy of your own home, play around with the Fairtax Calculator and see for yourself how you would fare under the fairtax.
As to the second part of this question, YOU and hundreds of millions of other taxpayers would see that the rate was not increased unnecessarily! Remember that today, under the income tax system, more than half of the public perceives that they pay no income tax and thus do not care what the rate is! Secondly these millionaires and billionaires the Obozo keeps talking about in reality pay very little income tax because they have arranged their affairs in such a way that allows them to live VERY well and consume like crazy while having very little in the way of "income". ALL of that would change overnight with the fairtax in place.
2) What happens in states that already have a sales tax, like in MA?
Fairtax has actually done a study on this and found that in Texas, which does not have a state income tax and everything is paid for with via property taxes and our state sales tax, we could do away will ALL state and local property taxes and lower the current state wide sales tax rate of 6.25% to a little less than 4% and raise the same amount of revenue with the sales tax alone simply by conforming our sales tax base to the Fairtax base! There are other benefits for states as well! You should take the time to read What's in it for the States.
The existing income tax causes prices to be higher in consumer goods and services by an average 22%. This is called embedded tax effects which we don’t see.
What the FairTax does is to say stop taxing everything in the production and service chains and everywhere in the middle and take all the taxation down to the end of the line at the consumer level; Shunt all the tax crap right down to the retail end. Voila 23%!
Problem is people will then SEE what the hell they’ve been paying.
But because it is transparent, every year Congress must vote on the Tax Rate and people will be watching what they do.
As it stands now it’s all smoke and mirrors.
Just off the top of my head, the Fair Tax will give the Federal government an incentive to keep the tax rate low. If they raise it, people can control how much taxes they pay by how much they consume. There will be an immediate backlash if the tax rates change.
By my estimation, the economy will be rolling so hard that the Federal Government will be awash in cash anyway. They may not need to raise the rate.
MA can still have their sales tax.