Proposed Fair Tax Rate Would Add Trillions to Deficits over 10 Years

Kyle Pomerleau and William G. Gale 

Tax Policy Center The proposed Fair Tax rate is far too low to achieve its sponsor's stated goal of deficit neutrality. As a fundamental tax reform, it is essentially unworkable. In a deal that secured Kevin McCarthy the speakership, House Republicans plan to vote on the FairTax Act of 2023 (H.R. 25), which would replace almost all federal taxes with a 23 percent national retail sales tax, create a “Family Consumption Allowance,” a type of universal basic income, eliminate the IRS, and create a trigger to eliminate the sales tax if the 16^th amendment—which outlines Congress’s authority to levy an income tax—is not repealed in five years.

In a forthcoming study to be published in Tax Notes Federal, we analyze the FairTax and find the proposed tax rate is far too low to achieve its sponsors’ stated goal of deficit neutrality.  The bill’s cited rate of 23 percent is “tax-inclusive,” meaning the tax is 23 percent of the total after-tax price. This corresponds to a 30 percent “tax-exclusive” rate, or the markup at the cash register. These rates, however, would be insufficient to replace current law income, payroll, and estate and gift tax revenue...........To Read More....

My Take -  What they're saying here pretty much sums up my views on FairTax, and how it can, and would be, manipulated as badly as what we have now.  Dan Mitchell pushes for this tax, and my comments at the beginning of the article reflect positions in this piece saying:

I've never been impressed with the Flat Tax/Fair Tax concept as it seems to me it would become as complicated and convoluted as the income tax system we have now.  But I think this is worth looking at anyway.  I still like the national sales tax.  Let's not be delusional.  There's no taxing system that can't be corrupted, and it will be corrupted.  Stealing other people's money under a "legal" framework is too entirely tempting for politicians to resist. The big difference is, at least in my opinion, any corruption taking place with a national sales tax will be more easily detected.   

My article, Repeal the 16th Amendment, Fix Government, Advance Freedom goes farther on this subject.