I was interested in whether FAIRTAX would benefit me personally, so gathered some data and ran some numbers on what FAIRTAX rate would have to be, to be revenue-neutral while eliminating all individual income tax, all corporate tax, and all social insurance tax.
If all consumer spending was subject to FAIRTAX (no exclusions), the FAIRTAX rate would have to be
well over 40% to be revenue-neutral (to get the boxed total in row FAIRTAX Revenue to equal the boxed total in TOTALFEDERAL Revenue).
At that point,
the bottom four quintiles of US household income would be in deficit, spending $10K to $19K/yr more than their income (even with all other taxes being zero). Compare row Savings(Deficit) to row Savings(Deficit)InclFAIRTAX.
You would have to be in the top quintile (average or median pretax income $158K/yr) to still be in the black, and even then you would be worse off than before (savings falls from $28K to $19K/yr).
Now, I think
the very highest income-earners would be much better off under FAIRTAX (like, those earning $500K/yr and up) but I don't have that data.
Obviously, people cannot indefinitely spend so much more than their income, so the result is that people would be forced to buy a lot less goods and services, i.e. cut their standard of living. The other result is that there would be an explosion of tax evasion - barter and black market economy.
The FAIRTAX boosters' response will be that eliminating all corporate taxes will allow companies to reduce prices enough to offset the >40% FAIRTAX sales tax. Sorry - not possible - compare total CORPORATETAX Revenue to total FAIRTAX Revenue.
The other response will be that eliminating all individual income and payroll taxes will allow companies to reduce prices enough to offset the FAIRTAX. Think about it - that means that total PretaxIncome has to be reduced by over one-third - compare total PretaxIncome to total FAIRTAX Revenue. No help to households' deficit.
After looking at this, I suspect there are some rich people quietly bankrolling the FAIRTAX proposal, for their own hidden agendas, and the non-rich FAIRTAX supporters are being
suckered bigtime. Things are not always what they seem, folks.
