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

I disagree that the Fair Tax will benefit either the economy or the majority of Americans for several reasons: 1) The numbers being used by Fair Tax proponents are fuzzy at best, and include optimistic predictions that are likely unsustainable. 2) The new tax system would be regressive as opposed to our current progressive tax system. 3) Enforcement would be a huge problem 4) The Fair Tax would Trade the IRS for at least two new government entities. In depth: 1) The "23 Percent" Math Kudos to HempforVictory for mentioning the difference between the "tax-exclusive" and "tax-inclusive" rates. Even if we ignore the tax inclusive/exclusive issue, the math on the Fair Tax is fuzzy, and even the tax-inclusive rate likely won't be as low as 23 percent. The Brookings Institution puts the actual amount that the tax would have to be closer to 30 percent without any exemptions – with exemptions, the rate would have to go even higher. (http://www.npr.org...) In its analysis, FactCheck.org puts the actual numbers for the "Fair Tax" as high as 34 percent, noting: "In truth, the actual rate would have to be at least 34 percent even if it fell on new homes, mortgage and credit-card interest and a host of other products and services not usually subject to state or local sales taxes." (http://www.factcheck.org...) 2) Regressive Tax If strictly implemented, the Fair Tax would automatically increase the tax rate of the poor and the middle class. As HempforVictory noted, it's only through the issuing of a "prebate" (basically a government subsidy) for the poor that their tax burden is actually lowered by the Fair Tax. It is, however, lying outright to claim that the Fair Tax is "progressive." Even with the prebates, it's only progressive for those making under $24,156. Including all of the taxes the Fair Tax would eliminate - those making between $25k-$200k/year, who wouldn't receive the "prebate," actually would have their tax burden increased (a necessity to fund the prebates for the poor and to subsidize the tax cuts for the rich). It's indisputable that the wealthy would see their overall tax burden lowered significantly (a point David Burton, chief economist of the Americans for Fair Taxation, concedes). That automatically makes the Fair Tax regressive at its core. It also makes the claim "people like Paris Hilton, spending their father's fortunes on frivolous things, will likely pay more in taxes under this plan" an outright falsehood. 3) Enforcement / Collection Problem The claim that there will be fewer entities to watch for tax evasion if the Fair Tax is implemented just isn't practical in an age where the numerous e-business platforms available on the Internet potentially makes EVERYONE a retailer or service provider (and as the enticement to skirt the tax code altogether is heightened by the establishment of the Fair Tax). One look at how the secondhand market for goods has exploded with resources like eBay and Craigslist should give a window of insight into how many people will be enticed to skip out on the tax code (and how many new small, underground businesses will spring up to serve that demand). Also, whatever gains might be made in reducing non-compliance by simplifying the tax code to the Fair Tax would likely be lost by the new businesses that would have to be taxed, and in the losses of revenue based on penalties for non-compliance. Contrary to what HempforVictory said, there will be incentive to cheat on paying the tax by crossing borders and buying goods. The claim that "the relative cost of retail goods and services after the FairTax remains very close to the same levels found in the marketplace today" by the AFFT makes no sense when you couple it with this claim "American companies doing business internationally are able to sell their goods at lower prices but at similar margins." Within the space of two paragraphs, the AFFT has contradicted itself. If the Fair Tax isn't applied to American goods sold overseas, that means prices overseas – so the prices of goods won't remain competitive; Americans will have a considerable incentive to skip paying the Fair Tax by buying more goods from outside the US. 4) Massive New Bureaucracies Contrary to what Fair Tax proponents claim and as appealing a sound byte as it is, eliminating the IRS under the Fair Tax proposal wouldn't be a good thing. Ultimately it would have to be replaced by a government agency similar to the IRS to collect the taxes. Those same newly-unemployed IRS agents everyone loathes would (by Fair Tax proponents own statements) be put right back to work doing virtually the same thing. Worse – it would also have to be replaced by another agency to disburse the $485 billion in monthly "prebates" (the US Treasury Dept. puts that number closer to $600-700 billion) to the poor. To get an idea of the scope of the agency, working with that kind of money would make the prebate system one of the largest categories of federal spending. One would then, of course need an IRS-like agency to police income reporting and the disbursement of the prebates (which would also still be necessary to determine prebate eligibility). Responding specifically to some of the other arguments raised by HempforVictory: Domestic Goods vs. Imports Claiming that American goods will be more competitive overseas with the Fair Tax is unrealistic because it assumes that the rest of the world won't enact protectionist measures to counter the effect of the Fair Tax. Further, I can't really understand the Fair Tax explanation so I may be wrong – but it seems that if "…imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically," as the website of AFFT claims – that would effectively give foreign products a leg up over US products in the domestic market (unless we're also going to apply tariffs to them). Taxing Undocumented ("Illegal") Immigrants Myth Undocumented immigrants are already subject to taxes under our current system. They all pay the same sales taxes that we do – and in many cases they also pay income taxes as well. The Social Security fund is currently buoyed by billions of dollars in contributions from undocumented immigrants. All the Fair Tax would do is further impoverish undocumented immigrants (which includes with it a host of negative ramifications). Ironically, if the Fair Tax were to go into effect as proposed, it could even make it easier for undocumented workers to operate in the US as they (and their employers) would be freed from navigating the income tax bureaucracy (which currently serves as a control on illegal labor). Capital Gains Tax Rate It's untrue to say that the Fair Tax will increase the rate of taxation on those who make their income through capital gains, because their capital gains won't be taxed. It's well-established that (even though they buy more and more expensive things) the wealthy still spend a much smaller percentage of their income on the goods/services that would be hit by the Fair Tax. So while the proposed [mythical] 23 percent rate is lower than the 15 percent rate capital gains is currently taxed at – the actual pool of money they're taxed ON would shrink dramatically (especially the wealthier one is). Paycheck-to-Paycheck Rate The claim that it benefits those living paycheck-to-paycheck is dubious. As Katherine Newman, director of the Institute for International and Regional Studies at Princeton University, notes – there are tens of millions of working poor Americans who live in what she calls the "missing class" (which earns between $20-40k/year but still lives paycheck-to-paycheck). It also ignores the millions of Americans who earn more than $40k/year who also live paycheck-to-paycheck.