Re: Fair Tax?
Won't work, not a chance. I've had this argument directly with the campaign. They insist that it should be a sales tax when it needs to be a VAT. But they just will not have it as a VAT.
The basic idea, fund everything through taxing consumption not incomes, yup, great. A grant to make sure it's not regressive, OK. The rate won't be quite what they say it will be but that's minor.
However, there's something we're pretty sure about concerning sales taxes. If you only levy the tax the once, at the final point of sale to the consumer, you can't really get the rate much above 10% or so without having vast evasion problems. They want it to be 24.5% (I think?) and to do that you need a VAT. That is, you collect little bits of it all the way down the production and value chain. Each stage reclaiming from the next the amounts it has paid on its own inputs. In essence, you use that supplier chain as an (unpaid!) enforcer of everyone collecting the tax.
If you've 25% once only, at the point of sale, then it's waaaay to easy to run the long firm fraud, just as one example. Run a business flogging computers, say. Stay legal for a few months. Then buy in a vast amount that you're not paying the Fair Tax on. Because you're in business, only final consumers pay that tax. Now flog that kit out at 15% off the price you paid for it plus the Fair Tax. You're 15% cheaper than anyone else can possibly be. You sell masses. At a 10% margin, and you then skip out before sending the cheque off to the taxman. You've paid the supplier, but not the taxman.
In a VAT system you cannot do this because the bloke who sold to you has charged you VAT initially.
So, a 25% sales tax, instead of a VAT, makes the illegal market 25% cheaper than the legal one. We're pretty sure that you can get away with 10% or so as a sales tax. Not enough incentive for people to really try rooking the system. 25% is too much. Massive and widespread evasion. Thus it must be a VAT at that rate, not a sales tax.
I've explained this at length to the campaign and got back simple blank refusal to either believe it or think of it being a VAT instead of a sales tax. My supposition is therefore that they're people more interested in running a campaign that gets some funding rather than people really proposing a decent change in the law.