In one section about the "FairTax", you state:
"The after tax price of consumer goods will go up due to the sales tax. However the pre-tax price of consumer goods is likely to fall since increased productivity will cause an increase in the supply of goods. We have seen that we cannot be sure whether or not there will be an increase or decrease in demand for consumer goods purchased within the United States. The price of these consumer goods will increase but not by the full amount caused by the tax increase."
This is erroneous. Pre-tax prices will not fall ONLY due to an increase in the supply of goods. They will also fall because the producers will no longer be paying income taxes on profits, payroll taxes on employees, and labor costs to lawyers and accountants whose sole function is tax planning. Jorgenson of Harvard, and Poterba from MIT and Kotlikoff of Boston have all done studies showing pre-tax consumer prices would fall between 22% and 25%. Meaning that the post-FairTax price of American produced goods will remain within 1% of where it is now, on average.
This is a critical point to leave out, considering it affects all of your other assumptions. Such as spending outside the country. Why, when the post-Tax prices are the same as now ? Or that the poor or seniors will be hurt. How, when post-Tax prices will be the same as now ?
You need to look beyond the very biased Brookings study to present a balanced article.
You also neglect to mention the effect of the rebate on the poor and seniors. A poor working family of four making and spending $25,000 per year would pay ZERO tax. Compared to today where they pay at least Social Security and Medicare totaling $1,900. Married seniors would pay ZERO tax on the first $20,000 of income and spending. Both these groups would actually pay ZERO tax on even more spending than that by virtue of buying used items like cars where no FairTax applies.
It is true that the wealthy will pay lower taxes -- but they have to save their money to accomplish that. Everyone else will benefit even if they don't add a dime to their savings. The FairTax accomplishes this "everybody wins" result through elimination of the inefficiency of the current taxes on Producers. When improving the efficiency of any system, the system is no longer a zero-sum game.
