Finally, Pimps would have to pay taxes. Pimps have had it too easy for too long...

(Simplified quote-nest)

 Just a clarification the underlined part should be FairTax (inclusive).

Now to the point. Please forgive me as I do not remember the website that I got some of these numbers for, I changed computers so I don't have the history to look up.

Of the ~$2.6 trillion tax collected (a recent year but I don't recall right now... i will get the data soon though) only 965 billion, or 37.1%, was from Income taxes. That is a sizeable amount but not insurmountable. Using simple math (I will not claim to know how the economists that came up with the FairTax calculated it) in order for the FairTax to be Revenue Neutral it must be applied to $11.3 Trillion of sales. That doesn't seem unreachable either. The US economy moving $11.3 trillion in Sales of New items and Services (Note: Services do not have to be "new" to be taxed [hope I don't get in trouble for this, but I wonder if prostitutes were to pay the FairTax, would they be classified under a service or a used item... just wondering as I never plan and requesting their assistance]) doesn't sound outlandish to me. 

Now I say all this without backup of numbers at the moment because I can't find the data at the moment, and for the expediency of this post I will try to find it now.

1% (23%-22%) of 11.3 trillion is 113 billion, which is ... LESS than 965 billion.

That's assuming your number is attained, and ignoring all other taxes to be removed, among other things, and ALREADY over 850 billion short.

Don't get confused by trying to align the 22% vs. the 23% as that is not the issue. The overall issue you are concerned with is revenue neutral, yes?

Yes your math adds up too. But you did not see that the total tax collected was $2.6 Trillion. To hit 2.6 Trillion FairTax dollars collected, the US economy would have to move New Goods and Services (in other words taxable sales) in total of $11.3 Trillion to be revenue neutral.

So the economy needs to hit $11.3 Trillion in taxable sales and services. I was just looking at the 2006 GDP report, and from just a glance (and not too much research on the GDP numbers themselves) PCE, or Personal Consumption Expenditures, are at 9,224.5 Billion. Now add the Government Consumption Expenditures & Gross Investment, at 2,523 billion, and you get a total of 11.75 Trillion in Expenditures. So the argument that the FairTax is revenue neutral has some claim to it. The total GDP for 2006 was 13,194.7 Billion.
(Source: http://www.bea.gov/national/nipaweb/TableView.asp#Mid)

Now once again to restate my point, 11.3 trillion dollars of taxable goods and services need to be sold to reach revenue neutral status, which is what your larger point is. GDP as I currently (admittedly I haven't studied it) is made up of several items (PCE, GDPI, Net Exports, and GCE & Gross Investment). Not all will be taxable, and I understand that. It does look like if you combine the expenditures of private and government you would hit that revenue neutral amount of $11.3 trillion.

I hope this makes sense and that I understood this correctly.

Actually, although I have several ongoing criticisms, this one is about aligning the 22% vs. 23%.

You said earlier, "Currently there is an embedded tax of about 22% in every thing we buy. This embedded tax is the Corporate Taxes, Payroll Taxes, etc. that the government collects from companies already. They want to make a profit so they pass the costs of the taxes and the cost of tax compliance on to the customers in the form of higher prices. This 22% is already an INCLUSIVE tax and would simply be replaced by the FairTax rate of 23% INCLUSIVE. Therefore the prices will stay about the same as they currently are."

Above (01/04/08 19:08), you say that aside from personal income taxes, estate taxes, etc., already 22 of every 100 dollars consumers spend is ultimately going towards taxes. That enables you to claim that the 23% FairTax will simply slide into place where all those bad old hidden taxes used to be, leaving sticker prices about the same (1% bigger).

Of course, this happy little scenario ignores the elephant in the room: If the FairTax is only barely larger than the embedded tax, how can its revenues be equal to those taxes AND the personal income tax?

That is the question I want you to answer, Eomund. Then we can move on to whether 23% is correct for revenue neutrality.

Thank you for making your requests known. I will look into it but my resources are not as complete as I would like. I don't have a couple of books handy, as I left them at work on accident. But I promise i will look into your question and answer it to the best of my ability.

I really do want to thank you for asking these questions though, they force me to look at both sides and come to terms with all the details of the FairTax. In this way I will become a better advocate for the FairTax and a better debater in general. I mean it, thanks.

I also genuinely enjoy a civil, reasoned debate, and believe it helps to educate all those who go into it with open minds, as well as helping participants reexamine and refine their own beliefs.

[edit:  and your manners have been well-nigh impeccable; I salute you.  I've been snippy at times even though I'm even-tempered by nature and certainly haven't tried to be nasty.]

Ok a partial answer to the 22% vs. 23%.

From the study that Jorgenson did that said the average embedded costs in prices were 22%. I just saw that the 22% was including the personal taxes of the employees as well. So the 22% includes the income taxes of the employees already.... I am still researching this however. But if this is true, and it seems to be, then the earlier statement
22% "hidden taxes" + income taxes =/= 23%
is not valid because my understanding of the 22% is not valid. That being said the remaining 1% difference would have to cover the rest of the taxes collected. This is not impossible, but again I don't have the figures in front of me to make my own judgment on this.

This still does not shake any faith I have that the FairTax is both more fair and a better system than we currently have.

I will report further findings later, perhaps tomorrow. I gotta eat dinner and get some sleep eventually. It is 11:40pm CST now... sheesh when did it get so late...?

That 22% number is meaningless. It's just an estimate of the part of the price of goods that the current tax code is causing. It's not tax revenue or anything like that. It is eliminated as a result of eliminating other taxes. Tax revenue matching has nothing to do with that number. Tax revenue matching involves taking the current tax revenue and figuring out what % you need to tack on to the current sales volume in order to reach it.

The whole point of comparing the 22% is because there was an earlier complaint about how the FairTax would suddenly make everything rise in prices, yet people weren't taking into account the fact that with the costs of adhering to the current tax code suddenly greatly reduced, that would contribute to keeping the prices down.