OK I agree on the progressive aspect of it, accounting for the rebate.
I actually like the concept in theory, the problem will be in the execution and the transition effects.
The underground economy (to avoid sales tax) is already considerable with local rates at 8%. What will happen when the rates are set at 20-30% combined ? The site underestimates the ingenuity of Americans to avoid paying sales tax.
The transition will be disruptive. The site claims that the final production of goods and services includes the impact of corporate income tax (This is true). It also claims that by simply taxing the end goods or services the cost burden is a zero sum game (OK, I buy that). The problem, however, is how do we instantanously go from point A to point B ?
Example: October 19,2007 Congress passes the Fair Tax to go into effect on Dec 31, 2008.
December 31, 2008 – I am on the car lot looking for a new Plug-in Hybrid from Chrysler. It costs $25,000. I decide to wait a day. Jan 1, 2008 I go back into the car dealer.
Either the dealer has to sell me the car for about 19,000 + 6,000 in sales tax and take a big loss, or I have to pay him 25,000 + 7500 and I get screwed.
Or we split the difference and BOTH get screwed.
