The Fairtax plan will benefit the economy and the majority of Americans

Prebate First of all, only households would receive the prebate, not businesses. The "point" is to make spending up to the poverty level tax free, and to keep the tax progressive so that higher spenders pay a greater tax as a percentage of their consumption. To exempt all essentials from the tax, which I assume means food, housing, gas, electricity, etc., would untax the rich much more than it does now, because they spend a lot more money on all of these things than the average American. Furthermore, the tax would have to be much higher if exemptions were allowed, as you already pointed out. As for your question about state income taxes, I'm sorry but I really don't know. I would imagine that it would be at their discretion. 1) The 23 Percent Math Kotlikoff conceded that in order to achieve true revenue neutrality under a STAGNANT model the actual rate would have to be .82% greater in order to achieve $76 billion in extra revenue. Many economists agree that real savings, and therefore investment would increase under a consumption based tax, and as a result, the economy will grow faster. By increasing GDP faster, the taxable base grows and increases the total amount of real revenue. Also, it's possible that tax evasion would also decrease significantly under the fairtax, as anybody making an income illegally would suddenly be subject to taxation, including illegal immigrants as well as drug dealers, prostitutes, etc. 2) Regressive "My misunderstanding of the universal applicability of the prebate unfortunately doesn't change the reality of how the tax burden ends up shaking out against the middle class." Your first article is just a graph comparing a "National Retail Sales Tax" to the current system, but it gives no explanation of how it reached those numbers. It is clearly not referring to the fairtax because the fairtax cannot be more than 23% of total income. Your second link seems to list the need for exemptions and increased tax-evasion as its main criticisms, both of which I have already addressed, nor are they relevant here. Also, if you're going to use such a long argument, I think it's best to quote some part of it. The third link gives no explanation of how it arrived at those numbers. In addition, the small differences are probably not even statistically significant, I would need to know the variances in the data before I could trust a graph like that. But it's nothing except a graph, you could have made it up yourself for all I know. "The wealthy would undoubtedly have their tax burdens lowered – the only way that wouldn't be the case is if they drastically changed their spending habits." Not necessarily, as you conceded in this argument, capital gains are taxed very little, which is a primary source of income for many wealthy people. Also, in the case of people like Paris Hilton, who's fathers are not self-made men, but rather from a family that made its money decades ago, the fairtax effectively taxes thier wealth, not just their income. Finally, I'll give you a link of my own that tells you how it arrived at it's calculations. It compares the net tax on income for a family of four at different income levels. It includes the income tax, the family consumption allowance and the payroll tax, both employer and employee. If you don't think the payroll tax for the employer should be included, you'll notice that even if you subtract 7.65 from the given percent at each income level, the fairtax is still lower. http://www.geocities.com... 3) Enforcement Collection Problem As you seem to forget, there is already an underground market for goods, a substantial one estimated to be over $1 trillion. Much of that currently untaxed market will than become indirectly subject to taxation. At worst, the new kinds of tax-evasion would be canceled out by reductions in current tax evasion. It is more likely that net tax evasion will be decreased however, because enforcement agencies will have less individual entities to deal with and less complex tax forms to go through, resulting in a greater amount of net revenue at any given tax rate. I already addressed the issue of people buying wholesale goods and reselling them on ebay, they would require retail permits and be subject to auditing. As for your example of the fake ID, I don't think that there is much of a market for services through ebay, it's just not that big of a concern. Do ebay entrepreneurs really change the equation? It would be kind of you to post some sources when you make claims about specific numbers. But even if your right, maybe it's not 80%, maybe it's only 50%, it's still substantially less work for the agency. As for the data being more concentrated, I'm not exactly sure what you mean by concentrated here, but if you mean that it is concentrated on only one thing(total sales), than it would therefore be less complex and easy to verify, which can only be seen as a good thing. "Given that the Fair Tax doesn't apply to used goods, would a used car lot pay zero federal taxes?" In a way, except for the fact that the price of a used good is depended on the price of the new equivalent. If the fairtax raises the price of new cars, than the price of used cars will increase universally. How can companies lower the pay for employees under the current system? Well they certainly wouldn't lower it to less than what they are actually taking home now, but they might want to lower it below the current gross pay. New contract negotiations are a small concern if the system facilitates economic growth, which it does. "Unless the Fair Tax is applied to overseas purchases of US goods in foreign markets, the federal government will lose out on revenue that it is now otherwise collecting in the form of corporate taxes." The fairtax would not be applied to purchases of US goods in foreign markets, so while it may lose out on revenue in that way, it would gain revenue from taxing imports. This has the effect of decreasing imports as well as increasing exports. How would imported goods be subject to the fairtax? Well, the fairtax is a point-of-sale tax, meaning that it is collected by the retailer. Most imported goods are purchased in stores. Some goods bought online directly from another country might be able to sneak through, but it's not as if it's impossible for the government to regulate internet purchases. 4) I think you're overestimating the workload of the new agencies. They would know how much product a retailer purchased tax-free as every wholesale purchase would be documented by the distributor. Compare their wholesale purchases to their inventory, adjust by the retail price, and you know how much tax they should have collected. It's really much easier than going through thousands of pages of code to determine if they did all of their deductions correctly. Domestic Goods vs. Imports Yeah, that sounds about right, American exports are cheaper because they're not subject to any domestic taxes, making them more competitive overseas and thus increasing net exports. Taxing Undocumented ("Illegal") Immigrants Myth Under the fairtax, the penalty of living here illegally is that you don't get a prebate check every month. If that makes it too difficult to live here getting paid low wages, than you can bet that the fairtax would discourage undocumented laborers from coming here. Capital Gains Tax Rate I appreciate your candor, but that concession takes a big blow at the argument that the fairtax untaxes the rich. It might tax the high salary earners less, but this shows that it depends on how you make your money whether or not you will benefit, even if you are wealthy. Very quickly, the credit card debt argument is flawed, read here: http://moneycentral.msn.com...